Chinese domestic demand’s contribution rate to economic growth averaged 105.7 percent between 2008 and 2017, according to National Bureau of Statistics data.
The highest contribution rate of 142.6 percent was registered in 2009, when the financial crisis shocked the globe, and the lowest contribution rate of 90.9 percent was recorded in 2017, when the global economy was recovering.
Between 2013 and 2017, national per capita disposable income increased 7.4 percent yearly, 0.3 percentage points higher than the average annual GDP growth rate. In 2017 alone, consumption contributed 58.8 percent to economic growth, 13.5 percentage points higher than the contribution rate in 2007.
By 2017, Chinese residents’ Engel’s coefficient — which designates the proportion of income spent on food — has dropped to 29.3 percent, indicating there is high possibility for consumption of clothes, housing and transportation to increase. For example, there are 29.7 cars for every 100 Chinese residents, compared to 200 cars for every 100 US residents and 150 for every 100 residents of Europe, the NBS said on its website on April 7.
Chinese residents’ need for service consumption has also started to increase in areas such as information, medical care, elderly care, home maintenance and tourism. In 2017 alone, the country’s information consumption hit 4.5 trillion yuan ($714.8 billion)
The country’s urbanization progress will also boost consumption, as NBS’s primary assessment shows that one percentage point of growth in the urbanization rate will lead to a two percentage point growth in consumption. There is still a huge gap between the 80 percent urbanization rate in developed countries and China’s rate of 58.52 percent, achieved by the end of 2017.