China's Consumption Recovers at Accelerated Pace

China's consumption has been recovering quickly, with some sectors almost returning to their pre-pandemic levels. The vigorous rebound has prompted central and local governments to introduce more policies, which experts believe will build on the growth momentum and unleash further consumption potential.

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RECOVERY IN FULL SWING

Domestic tourism was one of the sectors that took the lead in staging a rebound. During China's weeklong Spring Festival holiday that ended on Jan. 27, some 308 million domestic trips were made, up 23.1 percent from the Spring Festival holiday last year, according to the Tourism Ministry. The figure has recovered to 88.6 percent of the level in 2019.

Other industries such as retail and catering are also thriving. The combined revenues of major retail and catering businesses rose 6.8 percent from the last Spring Festival holiday. 

China's cinema box office during this year's Spring Festival holiday reported its second-highest gross figures for the holiday to date, raking in a total revenue of nearly US$1 billion.

"During this year's Spring Festival, we have seen a comeback of booming consumption activities, with spending in the trans-provincial tourism, catering and film sectors picking up rapidly," said Wang Yun, a researcher at the Chinese Academy of Macroeconomic Research.

MORE POLICY SUPPORT

The Chinese national authorities are interested in promoting an early recovery of domestic consumption as the main economic driving force in 2023. Boosted by this positive outlook, local governments have been moving to unveil an array of pro-consumption measures designed to fuel the growth of specific spheres.

Some parts of China's Xinjiang Uygur Autonomous Region have introduced measures to subsidize purchases of new passenger vehicles priced within a certain range.

Shanghai has announced that it will offer a 10 percent one-time subsidy of up to 1,000 yuan to consumers who purchase green and smart home appliances, while Shaanxi Province is set to nurture its sports, healthcare, elderly care and nursery sectors, as well as other growth spots.

The local policy incentives that have been put forward are conducive to releasing previously suppressed demand, exploring potential demand and creating new demand, said Chen Lifen, a researcher at the Development Research Center of the State Council.

Experts believe that the key to breeding new growth engines is providing a high-quality supply. To this end, the Commerce Ministry will roll out new policies spotlighting sectors such as automobiles and home furnishings.