Reuters:

According to the statistics, in 2022, the total retail sales of consumer goods dropped by 0.2% over the previous year. In December, it went down 1.8% year on year. For this year, what effective measures will be taken to boost consumption, especially consumer spending? Moreover, what were the respective contributions of the three key demands for economic growth? Thank you.

Kang Yi:

Thank you for your questions. Consumption is a topic concerning everyone. Expanding domestic demand remains one of our top priorities this year.

Last year, the entire consumer market was hit hard by the epidemic. Especially due to the restrictions on cluster and in-person consumption, the overall consumer market was greatly impacted. In addition, people have become less willing to consume. The problems of being afraid and inconvenient to consume have become prominent. Total retail sales of consumer goods decreased by 0.2% last year, and the consumer market was significantly affected by the short-term disruption of the epidemic. Under such circumstances, we immediately launched a set of policies to boost consumption and basically stabilized the domestic consumption market with some new changes emerging. For example, overall sales margin improved in December. Total retail sales of consumer goods dropped by 1.8% in December. Compared to the decrease of 5.9% in November, as we reported, it narrowed by 4.1 percentage points. Some new types of consumption have developed rapidly. Online retail sales have made up an increasing share. Specifically, online retail sales of physical goods accounted for 27.2% of the total retail sales of consumer goods in 2022, 2.7 percentage points higher than the previous year. People tend to have an increased demand for higher-quality goods or services. All of the above are the characteristics of our country's consumption over the past year. 

We have full confidence in China's consumer market in 2023. As China's epidemic response enters a new phase, production and life have gradually returned to normal, and consumer spending on brick-and-mortar businesses will gradually pick up. The consumer market is expected to recover in a steady manner. Here are some favorable conditions.

First, there is huge spending potential among Chinese consumers. There is a huge consumer demand with a population of more than 1.4 billion. At the same time, the general trend of the consumption structure upgrading has remained unchanged. Second, offline and service spending is gradually returning to normal. As production and life accelerate the pace of recovery, restrictions on consumption scenarios will be greatly reduced, creating favorable conditions for the recovery of service consumption and in-person consumption. Third, new consumer hotspots are emerging. New consumption models such as "internet plus" and "digital plus" have developed rapidly. Consumers tend to spend more on a green lifestyle, fitness, health care, and cultural products and services. Fourth, a stable job market and rising household income will also promote consumer spending. I mentioned that China's overall economy would definitely improve in 2023 when we looked at the outlook of China's economy in the next year. Economic recovery will improve employment and people's income and greatly boost consumers' capacity and willingness to spend.

At the end of last year, the National Development and Reform Commission issued a mid- and long-term plan to boost spending and domestic demand and made a series of arrangements for expanding the domestic market, promoting consumption, expanding employment, raising income, improving income distribution, perfecting income distribution pattern, facilitating consumption, and combining expanding domestic demand with deepening supply-side structural reforms. The implementation of these policies will continuously enhance people's spending power and promote the recovery, improvement, and scale of the consumer market in a steady manner.  

Regarding the contributions made by the three key demands for economic growth, final consumption expenditure, capital formation, and net exports of goods and services drove economic growth by 1 percentage point, 1.5 percentage points, and 0.5 percentage points, respectively; and they were responsible for 32.8%, 50.1%, and 17.1% of economic growth, respectively.

Thank you.