Car consumption to drive stable recovery
China's top economic regulator announced on Wednesday it will take steps to encourage consumption and boost momentum, including stabilizing strong spending on cars, in a bid to consolidate the recovery trend this year.
Analysts said that the country's latest moves would further boost consumer confidence, fully release pent-up market demand and provide a strong impetus for the auto market, which will help drive the consumer-led recovery in the coming months.
They said that domestic demand, particularly consumption, will be the key driver propelling China's economic growth in 2023.
Meng Wei, a spokeswoman for the National Development and Reform Commission, said the country will make efforts to stabilize automobile consumption, including accelerating the construction of charging station and urban parking facilities, promoting new energy vehicles in rural areas, and encouraging automobile companies to develop models suitable for use in rural areas.
Meng told a news conference in Beijing on Wednesday that China is studying and formulating a new document to spur consumption, which will mainly focus on key fields such as stabilizing spending on big-ticket items, enhancing service consumption and boosting rural consumption.
China's retail sales grew 10.6 percent year-on-year in March, up from the 3.5 percent growth in the first two months, according to the National Bureau of Statistics.
Yang Jinghao, chief economist at Concat Data Technology (Hangzhou) Co, said car consumption contributed to over 3 percentage points of retail sales growth in March, playing a key role in driving the overall consumption recovery.
He spoke highly of the NDRC's move to spur car consumption, particularly the promotion of NEVs in rural areas, saying the move will boost rural consumption and stimulate demand for facilities such as charging stations. "That will provide support for China's economic growth."
NBS data showed that China's auto retail sales rose 11.5 percent year-on-year in March, up from a 9.4 percent decline in the January-February period.
Ye Yindan, a researcher at the Bank of China Research Institute, said the rebound in auto sales was mostly due to discount promotions by car dealers.
Citing the NDRC's measures to boost auto consumption, Ye said those will further promote the improvement of infrastructure for new energy vehicles, create favorable conditions for the promotion of NEVs in rural areas and create new growth drivers for boosting auto consumption.
Given the strong macroeconomic policy support, the anticipated improvement in employment and spending on big-ticket items, the stable supply of in-person services and the low comparison base in the previous year, Ye estimated that China's consumption will continue to rebound in the second quarter with a rise of around 13 percent, becoming a key driving force in boosting economic recovery.
"The government should continue to support key sectors and enterprises that provide huge amounts of employment opportunities, such as the services sector, micro and small businesses and self-employed businesses," she added.
"More efforts are also needed to increase the support for low-income groups, expand the size of middle-income groups, and offer government subsidies for the consumption of big-ticket items such as cars, furniture and home appliances. … It is also advisable for the government to issue consumption coupons to promote the growth in services consumption like catering, accommodation, tourism and cultural entertainment," Ye said.
Guo Liyan, director of the Comprehensive Situation Research Office of the NDRC's Academy of Macroeconomic Research, said the key to consolidating the consumption recovery trend is boosting people's spending power.
More efforts should be made to improve the offerings of products and services, accelerate the construction of regional consumption centers and optimize the consumption environment, Guo said.
