Abstract: Recently, as the coordinated advancement of epidemic prevention and control and economic and social development continued to deliver results, the resumption of production and daily life has accelerated, residents' income growth has continued to pick up, and the consumer market has been recovering steadily. Analysts believe that the strong resilience demonstrated by China's consumption has become an important ballast for the Chinese economy to weather storms in the first half of this year.
Recently, as the effects of coordinated epidemic prevention and control and economic and social development continued to emerge, the resumption of work and daily life has accelerated, residents' income growth has kept picking up, and the consumer market has continued to recover steadily. Analysts argue that the strong resilience of China's consumption has made it an important ballast for the Chinese economy to withstand headwinds in the first half of this year. In the second half of the year, sustained efforts in policies such as expanding domestic demand, helping enterprises ease difficulties, and stabilizing employment are expected to promote further recovery and resurgence of consumption, thereby adding more momentum to the domestic economic "grand circulation" and the domestic-international "dual circulation."
Income recovery and demand recovery: The latest data show that in June, total retail sales of consumer goods nationwide reached 3.35 trillion yuan, down 1.8% year on year, with the decline narrowing for four consecutive months and cumulatively by 18.7 percentage points. From January to June, total retail sales of consumer goods were 17.23 trillion yuan, down 11.4% year on year, with the decline narrowing by 7.6 percentage points compared with the first quarter.
"In the first half of the year, localities adhered to a people's livelihood-oriented approach, issued various types of consumption coupons, promoted the integrated development of culture and tourism in the 'night-time economy,' helped invigorate the 'small-store economy,' and expanded consumption in light of local conditions through multiple measures, vigorously promoting a rebound in residents' consumption. In the first half of the year, the decline in per capita consumption expenditure of residents nationwide narrowed significantly, with the nominal decline and real decline narrowing by 2.3 and 3.2 percentage points respectively compared with the first quarter. The supply of necessities for residents' daily life, such as rice, flour, grain and oil, vegetables, meat, poultry and eggs, was fully guaranteed, and residents ate more meals at home. In the first half of the year, per capita expenditure on food, tobacco and alcohol rose by 5.0%, 2.9 percentage points faster than in the first quarter," said Fang Xiaodan, director of the Household Survey Office of the National Bureau of Statistics.
It is worth noting that the continued recovery of residents' income growth is closely related to the gradual recovery of residents' consumption levels. Data show that in the first half of the year, per capita disposable income of residents nationwide was 15,666 yuan, a nominal increase of 2.4% over the same period last year, and the nominal growth rate rebounded by 1.6 percentage points compared with the first quarter. After deducting price factors, the real decline narrowed by 2.6 percentage points compared with the first quarter. In the same period, per capita wage income of residents nationwide was 9,010 yuan, up 2.5%, accelerating by 1.3 percentage points compared with the first quarter and contributing 1.4 percentage points to the growth of per capita disposable income.
Fang Xiaodan said that in terms of wage income, the solid progress of work and production resumption across localities has restored the vitality of economic and social development, and the stable economic fundamentals laid the foundation for wage income growth. In terms of business income, policy support such as phased tax and fee reductions, rent cuts and lower interest rates, and inclusive finance has effectively reduced the production and operating costs of self-employed households and small and micro enterprises, and their business conditions have improved compared with the first quarter.
Online consumption has many highlights. In the first half of this year, "online consumption offsetting offline restrictions" became an important feature of the consumer market.
Data from the National Bureau of Statistics show that under regular epidemic prevention and control, new consumption modes and business forms such as online shopping, online entertainment and online classrooms grew against the trend. For example, in the first half of the year, the number of times residents across the country purchased goods or services via the Internet generally increased, and per capita postal and delivery expenditure rose 10.8%. In another example, in order to adapt to the needs of working and studying from home, per capita expenditure on desktop computers and laptop computers increased by 19.4% and 79.6% respectively in the first half of the year.
The "2020 Code Economy Epidemic Response Report" jointly released by the China Economic and Social Research Center of Tsinghua University and the Tencent Social Research Center shows that during the economic recovery, leisure and entertainment, catering, hotels and transportation rebounded most significantly, with the number of WeChat transactions increasing by 7-10 times. In the last week of April, the daily average commercial transaction value of WeChat Pay had recovered to the level at the end of 2019. The report believes that online model innovation under the WeChat ecosystem will further promote the upgrading of people's lifestyles; the depth and breadth of lifestyle digitalization will enter a new stage, with scenario-based, intelligent and personalized development becoming the trend of lifestyle changes.
Fu Yifu, senior researcher at Suning Financial Research Institute, analyzed that in the first quarter, affected by the COVID-19 pandemic, the all-round rise of online consumption was the biggest highlight. In the second quarter, as the domestic epidemic prevention and control situation continued to improve and the resumption of work, production and market operation in all walks of life advanced steadily, online consumption did not lose its momentum; meanwhile, offline consumption scenarios such as scenic spots, restaurants and hotels also returned to the public eye, and many consumers began to restart consumption demand that had been forced to be postponed during the epidemic.
Zhao Ping, director of the International Trade Research Department of the CCPIT Research Institute, believes that the epidemic further strengthened consumers' online consumption habits, causing the growth rate and share of online consumption to continue to rise, making it the biggest highlight of consumption growth in the first half of the year. At the same time, online consumption has also given rise to new consumption models such as community e-commerce, social e-commerce, group-based e-commerce, and livestream commerce, thus effectively releasing the potential of online consumption.
Consolidating the economy's ability to withstand pressure: Quan Heng, research fellow at the Institute of World Economy of the Shanghai Academy of Social Sciences, pointed out in an interview with this newspaper that both the "six stability" work and the "six guarantees" tasks ultimately need to be supported by strong consumption capacity. Since the beginning of this year, in the face of the enormous test of the COVID-19 pandemic, China has scientifically handled the relationship between regular epidemic prevention and control and economic and social development, in particular by adjusting consumption patterns in a timely manner and effectively meeting essential consumption demand, thereby maximizing risk hedging and economic stability.
"In the process of gradually forming a new development pattern in which domestic economic circulation plays the main role and domestic and international economic circulations promote each other, consumption is an important link connecting domestic and foreign market entities and plays a very significant role. Judging from the actual situation in the first half of the year, the recovery of China's consumer demand has not only become an important supporting force for the Chinese economy to resist various risks, but has also injected strong confidence into the world economy. In the future, the role of consumption will become even more prominent," Quan Heng said.
In the view of many analysts, consumption is a vivid manifestation of the Chinese economy's ability to withstand pressure in the first half of the year. Yu Hong, senior research fellow at the East Asian Institute of the National University of Singapore, believes that China has a huge domestic market and a vibrant regional economy, and the government has also introduced targeted fiscal, tax and financial measures to support enterprises, which has played an important role in economic recovery and growth, and also demonstrated the resilience and potential of China's economic development.
Xing Ziqiang, chief China economist at Morgan Stanley, said that compared with developed countries, China's current consumption structure is mainly based on physical goods consumption. In the future, as residents gradually pursue a high-quality life, the focus of their consumption will shift from meeting basic needs to increasing life experiences, and the consumption structure will also transform toward service consumption. Xing Ziqiang expects that consumption will gradually recover in the second half of this year and become the mainstay of economic growth next year, driving economic growth back to its potential level.