Consumer expenditure on goods and services has shown steady growth in terms of its contribution to China’s economic growth while that from services has become even more noticeable, according to official data released on July 16.
National consumer expenditure per capita went up 8.8 percent year-on-year to reach 9,609 yuan ($1,439) in the first six months, among which consumption from urban households gained 6.8 percent and that from rural areas registered 12.2 percent growth.
Total retail sales of consumer goods in the first half surpassed 18 trillion yuan, up 9.4 percent year-on-year. Sales of products related to the ongoing upgraded consumption have shown the most robust growth, with home appliances and audio-video equipment, communication equipment and cosmetics showing the most prominent year-on-year growth of 10.6 percent, 10.6 percent and 14.2 percent, respectively.
Food, tobacco and alcohol made up 29.3 percent of consumption per capita during the past six months, reaching 2,814 yuan. Expenditure on healthcare per capita registered the most rapid growth rate of 19.7 percent in the first half, according the official statistics.
Mao Shengyong, spokesman of the National Bureau of Statistics, said at a news conference on July 16 that China’s economic structure has been undergoing optimization and upgrading as consumption accounted for 78.5 percent of the country’s economic growth during the first half of this year, a year-on-year increased of 14.2 percentage points.
“Driven by the emerging demand and new consumption mode, expenditure on services has been increasing at an even faster pace, especially in tourism, health, senior care, education and culture,” said Mao.
Investors have also shown confidence in the long-term performance of the Chinese consumption sector. Statistics provided by market information provider Wind Info show that there has been a noticeable capital inflow into China’s A-share market via the Shanghai and Shenzhen Stock Connect mechanisms since April, focusing on the sectors of consumption and home appliances. Companies including Chinese liquor Kweichow Moutai, dairy producer Yili Industrial Group and appliances giant Midea Group have seen the greatest capital inflows over the past three months.
Analysts from China International Capital Corporation Ltd wrote in a report that companies with their business focused on upgraded consumption and new economy are likely to show strong performance in the mid- to long-term.
Jack Lee, head of China A-share Research at asset management company Schroders Plc, said that the institution has a positive view on the long-term growth prospects of China’s consumption demand. Home appliances, food and beverages, and tourism will be the three areas offering growth in the long run, he said.
However, Huang Xiaodong, executive vice-director at the Institute for Advanced Research of Shanghai University of Finance and Economics, pointed out that the Chinese household debt－mainly coming from mortgages－will probably hamper the growth rate of Chinese families’ consumption expenditure. But the ongoing individual income tax reform will hopefully translate into more vitality in consumption.