Economic Daily:

Last week, the National Bureau of Statistics (NBS) released economic data for the first half of the year. What is your opinion on the performance of the consumer market in the first half of the year? Thank you.

Yan Dong:

I would like to invite Ms. Yang to answer this question.

Yang Mu:

Thank you for your question. This is a good question. Since the release of the economic data for the first half of the year, the consumer market figures have drawn widespread public attention. So I would like to take this opportunity to share some of our views from three perspectives, taking into account the current trends and characteristics of the consumer market.

First, structurally speaking, the consumer market has entered a development stage where goods and services are equally important. In recent years, rising living standards in China have expanded consumer demand beyond physical goods. Services like cultural tourism, education and domestic help have seen steady growth. Accordingly, the consumer market has shifted from being driven primarily by goods consumption to a stage featuring balanced growth in both goods and services consumption. Last month, the NBS started releasing an indicator for the total retail sales of consumer goods and services, offering a more complete and accurate read on the consumer market than the previous measure. In the first half of the year, total retail sales of consumer goods and services increased by 2.7% year on year. Service retail sales grew by 5.3%, 4.2 percentage points higher than the growth rate of goods. Service consumption grew faster than goods consumption, indicating stronger demand for services. This is consistent with China's current socioeconomic development and reflects the optimization of residents' consumption structure and rising consumer demand.

Second, in terms of goods consumption, the consumer market has kept expanding and upgrading, demonstrating remarkable resilience. Goods make up nearly 90% of total retail sales. Despite a high base in the same period last year, total retail sales in the first half increased by 1.3% year on year, fully demonstrating the resilience of continued growth in goods consumption. The slowdown in the growth rate of total retail sales was mainly due to automobiles and petroleum products. Retail sales of these two product categories at enterprises above designated size account for nearly one-eighth of the total, making their drag on the overall figure quite significant.

However, at the same time, we believe it is more important to see that among the 16 major categories of goods in retail sales, 10 categories achieved growth, with 7 of them growing at a rate of over 5%. The consumption of green, smart, and health-related goods maintained strong growth. According to commercial big data monitoring, in the first half of the year, sales of smart glasses, home appliances with high energy efficiency, action cameras, and electrocardiogram monitors all achieved double-digit growth. Therefore, we believe that the fundamental trend of generally stable growth in goods consumption has not changed and has shown positive changes.

Third, from the perspective of development prospects, consumption will continue to play a primary role in economic development. In the first half of the year, final consumption expenditure contributed 2.1 percentage points to GDP growth, remaining the primary driver of GDP growth. Growth in service consumption was strong, while although the growth rate of goods consumption has slowed down relatively at present, there is still considerable room for growth and potential for further increases. Why do we say that? Because it takes time for new products to go from research and development to production and market acceptance by consumers. We can think back to 20 or 30 years ago, when mobile phones, computers, and cars were rare items for many families, but now they have become commonplace in ordinary households. More than a decade ago, when new energy vehicles first entered the market, people felt that their driving range was short and charging was inconvenient. But now they have become the mainstream choice for family car purchases. In recent months, the market penetration rate of new energy vehicles has exceeded 60% for several consecutive months, which means that more than 6 out of every 10 new cars sold are new energy vehicles. In the past two years, new products such as smart homes and smart robots have begun to enter the market. It is believed that with technological iteration and upgrading, and better balancing supply and demand, they will enter thousands of households in the near future, just like mobile phones, computers and cars. While meeting people's needs for a better life, they will also bring new consumption growth. In addition to new products, China's county-level markets and consumer groups such as the elderly, youth, infants and children are huge, with obvious trends in upgrading consumption demands, and all have broad prospects for consumption growth.

Overall, we believe that as a series of policies to expand domestic demand and promote consumption continue to take effect, the supply of goods and services continues to be optimized, and new growth points and new scenarios for consumption are emerging at an accelerated pace, China's strengths as an enormous market will be further highlighted, the consumer market will continue to grow and expand, and its role as the "main engine" of economic growth will become stronger and stronger. Thank you.