Quality Improvement and Capacity Enlargement of Consumer Market to Promote the Innovative Development of Circulation Mode

2023-01-11 14:19:00

Quality Improvement and Capacity Enlargement of Consumer Market to Promote the Innovative Development of Circulation Mode

—Series Report VII on the Economic and Social Development Achievements since the 18th CPC National Congress


Source: National Bureau of Statistics 

Published on: September 22, 2022 Characters: 4819

 

Since the 18th CPC National Congress, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments have thoroughly implemented the strategy of expanding domestic demand, actively introduced policies and measures to expand consumer demand, and made historic achievements in the development of the consumer market. Over the past ten years, China has continuously exerted its advantages in the super-sized market, steadily expanded the scale of market sales, optimized and upgraded the consumption structure, continuously strengthened the construction of the commercial system, innovated and developed the circulation mode, and significantly improved the circulation efficiency, developing consumption into the main driving force for economic growth, and achieving sustained results from the construction of a new development pattern.

I. Steady Expansion of the Market, with the Enhanced Basic Role of Consumption

Since the 18th CPC National Congress, China's economy has entered a stage of high-quality development, with people's income continuing to rise and consumer demand being effectively released, providing strong support for the development and growth of the consumer market, and continuously consolidating the basic role of consumption in economic growth.

(I) Sufficient impetus for the development of consumer market to lead to constant market expansion

The consumer market continues to expand. As China's economy has moved towards high-quality development, economic growth has been kept within a reasonable range, resulting in a steady increase in people's income and a sustained increase in market supply capacity, and developing an increasingly active consumer market with rapid growth of all types of new consumption, and constantly expanding market size to a new level. The total retail sales of social consumer goods exceeded RMB 30 trillion and RMB 40 trillion respectively in 2016 and 2019, and reached RMB 44 trillion in 2021, a new record high, which is 2.1 times of that in 2012.

The consumer market has shown strong resilience. As a developing country with a large population, China boasts the advantage of a super-large market, and has a consumer market with wide development space, great potential and sufficient resilience. In early 2020, the consumer market was severely impacted by the COVID-19 pandemic, and all regions and government departments thoroughly implemented the decisions and arrangements made by the CPC Central Committee and the State Council, effectively coordinated COVID-19 countermeasures with economic and social development, steadily restored the order of production and life, and gradually improved market sales. In 2021, the total retail sales of social consumption increased by 12.5% over the previous year, with an average growth rate of 3.9% in 2020 and 2021.

(II) The further consolidated role of consumption as a main driver of economic growth, with a relatively rapid growth in consumer spending

The fundamental role of consumption in driving economic growth has become more prominent. In 2021, China's final consumption rate was 54.5%, 3.4 percentage points higher than in 2012. In the final consumption expenditure, household consumption expenditure maintained a relatively fast growth. From 2013 to 2021, the AAGR of household consumption expenditure exceeded 9%, and its proportion in the final consumption expenditure remained stable at about 70%, of which 70.7% in 2021. From 2013 to 2021, the average annual contribution of final consumption expenditure to economic growth exceeded 50%, of which, the contribution rate of final consumption expenditure to economic growth in 2021 was 65.4%, 51.7 percentage points higher than that of gross capital formation, and was the first driver of economic growth.

II. Boom in both Urban and Rural Markets, with Progressive Optimization of the Regional Structure

Since the 18th CPC National Congress, we have accelerated the coordinated development of urban and rural infrastructure networks, continuously promoted a circulation development mechanism for rural development through urban areas and urban-rural integration, and improved the utilization efficiency of circulation facilities and the facilitation of commercial services, achieving steady growth of urban and rural consumer markets. Also, we have promoted the implementation of major regional strategies and the coordinated regional development strategy, driven the interconnected development of the regional economy, and continuously enhanced the regional coordination of the consumer market.

(I) Steady growth in consumption in urban areas, effectively stimulating demand in counties and townships

The urban consumer market has maintained steady growth. With the income of urban and rural residents increasing steadily, and the commodities on the market being increasingly rich, people’s ability and willingness to consume have been effectively enhanced. The accelerated urbanization process has further driven the consumption agglomeration and consumption potential in cities and towns, especially urban areas. At the same time, the urban commercial layout has been further optimized, and the integration of commercial resources has been enhanced, sustaining a sound momentum of growth of the urban consumer market. In 2021, the retail sales of consumer goods in urban areas exceeded RMB 27 trillion, with an annual growth rate of 8.1 percent from 2013 to 2021.

Consumer markets of counties and townships have exhibited good growth. With the consolidation and promotion of poverty alleviation and the in-depth implementation of the rural revitalization strategy, the income of rural residents has grown faster than that of urban residents, narrowing the relative gap between the income of urban and rural residents. Consumer markets in counties and townships, including towns and rural areas, have been effectively stimulated, and their consumption potential has been further explored, accelerating the development of consumer markets in counties and townships and significantly increasing their market share. In 2021, the retail sales of consumer goods in towns and villages respectively reached RMB 10.8 trillion and RMB 5.9 trillion, with an AAGR of 10.4% and 9.8% from 2013 to 2021, 2.3 percentage points and 1.7 percentage points higher than that of urban areas. The proportion of retail sales of consumer goods in towns and villages increased from 34% in 2012 to 38% in 2021.

(II) A rapid development and an increasingly coordinated regional structure achieved in the consumer market in the central and western regions

The regional structure of the consumer market has developed more reasonable. The CPC Central Committee and the State Council have made well-coordinated efforts to advance the implementation of major regional strategies such as the coordinated development of the Beijing-Tianjin-Hebei region, the development of the Yangtze River Economic Belt, the development of the Guangdong-Hong Kong-Macao Greater Bay Area, the integrated regional development of the Yangtze River Delta, and the ecological protection and high-quality development of the Yellow River Basin, and have made solid progress in promoting coordinated regional development strategies such as the large-scale development of the western region, the full revitalization of the northeastern region, the rise of the central region, and the trailblazing development of the eastern region, promoting more balanced and coordinated regional development of the consumer market. Regarding the regional growth, the growth rate of the consumer markets in the central and western regions was relatively high. From 2013 to 2021, the AAGR of retail sales of consumer goods in the central and western regions was 10% and 9.7% respectively, 1.6 and 1.3 percentage points higher than that in the eastern region. According to the proportion of each region, a more reasonable regional structure has been developed. In 2021, the proportion of retail sales of consumer goods in the eastern region in China's total retail sales of social consumer goods dropped from 52.5% in 2012 to 50.6% in 2021; and the proportion gap between the retail sales of consumer goods in central and western regions and that in eastern regions narrowed from 30.7 and 33.1 percentage points in 2012 to 26.5 and 29.6 percentage points in 2021, respectively.

III. The Rapid Development of New Forms of Consumption and the Increasing Demand for Upgraded Consumer Goods

Since the 18th CPC National Congress, the rapid development of new technologies such as the Internet, cloud computing and artificial intelligence has enabled the continued growth of new forms of consumption characterized by new business forms such as online shopping and mobile payment, effectively invigorating the market, steadily advancing the transformation and upgrading of consumption, and booming service consumption of services.

(I) Boom in online consumption, continuously promoting green consumption.

Online retail has maintained a sustained and rapid growth. With the rapid application of the Internet, especially mobile Internet technology, and the continuous improvement of the logistics distribution system, profound changes have taken place in people's consumption patterns, and online shopping has become an important growth point in the consumer market. In 2021, the total business volume of the postal industry, which reflects the volume of express logistics business, exceeded RMB 1.3 trillion, with an AAGR of more than 50% from 2013 to 2021. China's online retail sales of physical goods totaled RMB 10.8 trillion, up 12% over the previous year; The online retail sales of physical goods accounted for 24.5% of the total retail sales of consumer goods, 15.3 percentage points higher than that in 2014. From 2015 to 2021, the AAGR of the online retail sales of physical goods exceeded 20%. In particular, in 2020, the online retail sales of physical goods grew despite the decline in the total retail sales of consumer goods, reaching RMB 9.8 trillion nationwide, an increase of 14.8% over the previous year.

Green consumption has been vigorously developed. As the concept of green environmental protection gradually gained popular support and the market supply capacity continued to be optimized and improved, the consumption of green commodities with low energy consumption and low-carbon consumption has increased rapidly, and the market recognition of related products continued to increase. According to the statistics of China Automobile Dealers Association, the sales volume of new-energy passenger vehicles in 2021 was about 3 million, more than 25 times that of 2015, with an AAGR of over 70% from 2016 to 2021; and over 17 million used cars were sold in 2021, 3.7 times that of 2012, with an annual growth rate of over 14% from 2013 to 2021.

(II) The improvement and upgrading of the consumption structure, with a growth momentum of consumption of bulk commodities

Consumption for upgrading products has developed rapidly With the steady growth of residents' income and the continuous improvement of market supply, the structure of residents' consumption has been gradually upgraded, and more attention has been paid to the quality improvement of commodity consumption, resulting in a progressive increase of residents' diversified, personalized and high-quality consumption. In 2021, the retail sales of cosmetics and communications equipment above designated size have both increased by more than 10% over the previous year, accounting for 1.2 percentage points and 2.5 percentage points more than that of 2012. To meet the demand for quality consumption, brand specialty stores has rapidly developed. In 2021, among the retail enterprises above designated size, there were more than 33,000 brand specialty stores, an increase of more than 10,000 over 2012; and from 2013 to 2021, the number of brand specialty stores increased by more than 6% annually, and the sales increased by more than 10% annually.

The upgrading of automobile consumption is occurring at a faster pace. Driven by policies and measures such as old-for-new car scheme, car to the countryside and benefiting farmers and accelerating the scrapping of old cars, urban and rural car consumption demand has been continuously stimulated and released, and car ownership has continued to grow. By the end of 2021, there were nearly 300 million civilian automobiles in China, with an AAGR of 11.6% from 2013 to 2021. In 2021, the number of cars owned by every 100 households was 41.8, 2.5 times that of 2013. Retail sales of auto products above designated size exceeded RMB 4.3 trillion, accounting for about 10% of the total retail sales of consumer goods. Meanwhile, consumers' pursuit of high quality and performance continues to rise, leading to strong demand for replacement of high-end cars and good sales of MPV, SUV and other models.

(III) Various hot spots of service consumption, with the rapid increase of catering consumption

The service consumption market continues to expand. On the demand side, the steady improvement of residents' living standards has stimulated their demand for service consumption, and the consumption of culture and entertainment, leisure and tourism, education and training, health and other services has gradually become a new consumption hot spot. On the supply side, with the rapid development of the modern service industry, the quality and refinement of services have been continuously improved, constantly expanding the market supply of high-quality services that emphasize experience and taste, and effectively improving the service market supply. Consumer demand for services continues to be released, making service consumption an important part of the upgrading of the consumption structure. From 2013 to 2021, China's per capita consumer spending on education, culture and entertainment grew at an average annual rate of more than 8%, with a year-on-year increase of 27.9% in 2021; per capita spending on transportation and communications grew at an average annual rate of 9%, with a 14.3% increase in 2021. In 2021, consumer spending on services accounted for 44.2% of per capita consumer spending, 4.5 percentage points higher than in 2013.

The consumption in catering sector has developed rapidly. In 2021, the income from catering sector exceeded RMB 4.7 trillion, double that of 2012, with an AAGR of 7.7 percent from 2013 to 2021. Driven by factors including the increasing popularity of Internet, especially mobile Internet, take-out catering services have witnessed rapid growth in recent years. From 2019 to 2021, the turnover of catering delivery and take-out service above the designated size grew at an average annual rate of 15%, with a year-on-year increase of more than 30% in 2021, which was significantly faster than the overall level of the catering industry.

IV. Continuous Progress in the Building of a Commercial Circulation System and Steady Advancement of High-quality Development of the Consumer Market

Since the 18th CPC National Congress, continuous progress has been made in the construction of the commercial system, and remarkable achievements have been made in cultivating market entities in the field of commerce and trade to continuously promote the development of chain operation, commodity trading market and multi-level circulation network system. New models such as the "Internet Plus" have helped improve the quality and efficiency of business operations, and improved the efficiency of commercial circulation.

(I) The steady advancement of the construction of the commercial system, with a continued improvement in the digitalization level of commercial and trading enterprises

The number of market entities in the field of commerce and trade has increased rapidly. Through deepening the reform of "streamlining administration, delegating power, strengthening regulation, and improving services", we have significantly improved the business environment, greatly stimulated the vitality of market entities, and substantially increased the number of market entities. By the end of 2021, the number of legal entities in the wholesale and retail industries exceeded 9.3 million, about 3.5 times that of 2012, with an AAGR of over 15% from 2013 to 2021; and the number of legal entities in the accommodation and catering industries exceeded 570,000, about three times that of 2012, with an AAGR of over 13 percent from 2013 to 2021. The increasing number of market entities in the commercial circulation industry not only reflects the continuous optimization of the market environment, but also helps to enhance the vitality of the consumer market.

Continued efforts have been made to advance the digital transformation of commercial and trading enterprises. The wide and deep application of cloud computing, big data, the Internet of Things, mobile Internet and other new-generation information technologies have provided technical support for the transformation of commercial circulation. Market entities in the commercial circulation industry have taken the initiative to embrace Internet information technology, accelerating the development of online sales, takeout and food delivery and other business forms, developing various "Internet Plus" business model one after another, and significantly increasing the number of enterprises with Internet business. In 2021, more than 40,000 enterprises in wholesale and retail, accommodation and catering above designated size have conducted Internet businesses, accounting for 12.4% of the total enterprises above designated size, 6.5 percentage points higher than in 2012. The digital transformation of commercial and trading enterprises has boosted the sales growth of enterprises. In 2021, the sales volume (turnover) of enterprises above designated size in the wholesale and retail, accommodation and catering industry with Internet business increased by more than 20 percent over the previous year.

(II) The diversified development of market supply main bodies to result in a boom in new business models

Efforts have been made to orderly promote the franchising operation of commercial and trading enterprises and the large-scale growth of commodity trading markets. With the rapid development of new business models, chain operation enterprises and commodity trading markets have maintained steady development. The scale of chain enterprises has expanded continuously. In 2021, the number of retail chain stores in China was 292,000, an increase of 51.6% over 2012; and the sales of commodities were 8.3% higher than in 2012. The total number of chain catering enterprises in China was 43,000, an increase of 1.4 times over 2012; and the turnover increased by 96.8% over 2012. Besides, the economies of scale in commodity trading markets have been increasing. In 2021, China had 3,753 commodity trading markets with an annual turnover of more than RMB 100 million, and the average turnover of entities increased from RMB 1.79 billion in 2012 to RMB 3.08 billion in 2021 [1].

Urban commercial complexes and community convenience stores have developed rapidly. A multi-level urban circulation network system with central business districts and commercial blocks as the core and community commerce as the basis has been continuously developed. Large commercial facilities such as commercial complexes have increased significantly. As of 2021, China had 21,700 urban commercial complexes, 612 more than in 2015. The number of independently operated merchants in urban commercial complexes totaled 331,000, an increase of 65.1% over 2015. The total sales volume of merchants in urban commercial complexes (including the sales volume of retail goods and the turnover of merchants in catering and service industries) exceeded RMB 1 trillion, an increase of more than 90% over 2015. Community living services became more convenient. By the end of 2021, the number of convenience stores among retail incorporated enterprises above designated size exceeded 2,000, with an annual growth rate of more than 10% from 2013 to 2021.

(III) The gradual reduction of the cost of commercial circulation and the continuous improvement of the efficiency of circulation

The operating costs of commercial and trading enterprises have fallen. Policies and measures such as tax and fee cuts continued to take effect, reducing the operating expense ratio of commercial and trading enterprises, as well as their debt burden. In 2021, the expense ratio (the proportion of selling expenses, administrative expenses and financial expenses in main business income) of wholesale and retail enterprises above designated size was 4.7%, 0.6 percentage points lower than in 2012; At the end of 2021, the corporate asset-liability ratio was 72.2%, down 1 percentage point from the end of 2012.

The operating efficiency of commercial and trading enterprises has been significantly improved. Driven by the continuous improvement of information technology and further application of new technologies and models, the operating efficiency of commercial and trading enterprises has been constantly improved. From 2013 to 2021, the turnover of current assets of wholesale and retail enterprises above designated size remained at a relatively high level on the whole, with 2.7 turnover times in 2021, 0.2 times higher than the previous year and 0.1 times higher than the average level from 2013 to 2020; In 2021, the per capita operating income of wholesale and retail enterprises above designated size increased significantly compared with 2012, with an annual average of more than RMB 5 million per capita from 2013 to 2021.

Since the 18th CPC National Congress, the scale of China's consumer market has continued to expand, consumption structure has been optimized and upgraded, new forms and models of business have been flourishing, and circulation efficiency has been significantly improved. However, in the development of the consumer market, there are still many difficulties and obstacles impeding the release of consumer potential, and relevant systems and mechanisms need to be further improved. Looking ahead, as the strategy of expanding domestic demand is further implemented, the new development pattern in which domestic and foreign markets boost each other, with the domestic market as the mainstay is being established at a faster pace, and the complete domestic demand system is being improved, the size of the consumer market will continue to expand, further deepening the transformation and upgrading, and continuing to consolidate and strengthen the basic role of consumption in economic development.

Note:

[1] Data of national chain retail and catering enterprises and commodity trading market with more than RMB 100 million in 2021 are annual report data.