South China Morning Post:

Boosting consumption is a key priority of government work this year. After the holiday spending surge, how does the NBS project the consumption trajectory for the remainder of this year? Thank you.

Fu Linghui:

Thank you for your question. Consumption is also a topic of great public interest. Its development not only relates to expanding domestic demand but also bears directly on improving living standards. When assessing the current consumption landscape, we need to look not only at the total retail sales of consumer goods but also at service retail sales. This is because consumption encompasses not only goods, but services as well. While total retail sales of consumer goods mainly reflect spending in goods, tracking developments in the service sector requires a greater focus on service retail figures. To assess how consumption will perform this year, we need to evaluate the overall trend based on the performance in January and February.

Since the beginning of this year, driven by policies aimed at boosting consumption and influenced by the extended Spring Festival holiday, market sales have rebounded notably. The potential for service consumption has been unlocked, and the momentum of new forms of consumption has strengthened. This is reflected in several key indicators. In January and February, the total retail sales of consumer goods grew by 2.8% year on year, with the growth rate accelerating 1.9 percentage points from December last year and 1.1 percentage points from the fourth quarter of last year. Service retail sales rose 5.6% year on year, up 0.1 percentage point from the previous year's growth rate, continuing to outpace goods retail sales. The main characteristics are as follows:

First, service consumption expanded steadily. Boosted by the Spring Festival holiday, spending on cultural and tourism activities rose markedly, driving growth in related service sales. In the first two months, retail sales in sectors such as travel advisory and rental services, as well as cultural, sports and leisure services, maintained a rapid growth rate of over 10%. During the Spring Festival, domestic trips approached 600 million, and total travel spending exceeded 800 billion yuan, both reaching historic highs. At the same time, the expansion of the visa-free entry policy drove an increase in inbound tourists, further boosting domestic market sales. Increased gatherings and social activities during the holiday also drove a significant expansion in dining-out consumption. In the first two months, catering revenue increased 4.8% year on year, with growth accelerating by 2.6 percentage points from December last year.

Second, goods consumption is upgrading with improved quality. The quality of household consumption has steadily improved, and boosted by Spring Festival holiday spending, sales of some essential daily necessities expanded markedly. In the first two months, retail sales for grain, oil and food products by enterprises above designated size rose by 10.2%, while retail sales of clothing, shoes, hats and textile products increased by 10.4%. The main reason for the rapid growth in essential daily necessities is that residents are placing higher demands on the quality and grade of goods. For example, while overall food consumption is relatively stable in volume terms, the increase in sales value largely stems from growing demand for green and healthy foods. At the same time, driven by the upgrading of consumer spending, retail sales of goods related to aspirational and quality-of-life needs also posted relatively strong growth. In the first two months, retail sales of gold, silver and jewelry by enterprises above designated size increased by 13% year on year. The effect of policies promoting consumer goods trade-ins continued to be evident. In the first two months, retail sales of communications equipment by enterprises above designated size grew 17.8%, sustaining rapid growth. Retail sales of household appliances and audiovisual equipment increased 3.3%, marking a clear rebound compared with December last year. Among household appliances and audiovisual equipment, sales of high-efficiency products maintained double-digit growth, reflecting the expanding demand for green products.

Third, new forms of consumption are developing well. As online and digital consumption gained momentum, online retail sales continued to expand. In the first two months, online retail sales of goods and services increased by 9.2% year on year, significantly outpacing the growth rate of total retail sales of consumer goods. Of this, online retail sales of goods rose 10.3%, outpacing the growth of total retail sales of goods, further strengthening their role in driving consumption. The popularity of online services continues to rise. Retail sales of online services grew by 7.3% year on year in the first two months, also outpacing the growth of total service retail sales. Since the beginning of this year, the online micro-drama market has been particularly vibrant. Platform monitoring figures show that in January-February, the transaction volume on micro-drama platforms surged more than 30%. At the same time, green consumption, health-oriented consumption, and the debut economy are playing an increasingly prominent role in boosting consumption.

Overall, market sales showed positive changes in January and February, with growth momentum picking up. This was driven by the combined effects of pro-consumption policies, consumption upgrading, and the rise of new consumption drivers. Looking ahead, the upgrading of the household consumption structure and expansion of new consumption drivers will remain important factors influencing consumption growth. The rollout of a series of pro-consumption policies will further reinforce this trend, and consumption is expected to maintain steady growth. That said, sustained efforts are still needed to build a strong domestic market and to stimulate the endogenous dynamism of household consumption. Moving forward, we need to leverage the strengths of China's enormous market, advance special initiatives to boost consumption, formulate and implement an income growth plan for both urban and rural residents, promote the expansion and upgrading of goods consumption, and introduce initiatives to improve service consumption for public benefit. Efforts will also be made to continuously optimize the consumption environment, unlock the consumption potential in areas such as culture and tourism, sports events and health care, invigorate consumption vitality, facilitate smoother economic circulation, and steadily improve living standards. Thank you.