Customers buy into high-tech consumption

Bright spot

Consumption has become a major driver of China's economic growth. China's retail sales — a significant indicator of consumption strength-grew 12.7 percent year-on-year in May, compared with 18.4 percent in April, data from the National Bureau of Statistics showed.

In the January-May period, the country's retail sales increased 9.3 percent year-on-year to 18.76 trillion yuan ($2.6 trillion), the NBS said. Moreover, online consumption remained a bright spot as online retail sales rose 13.8 percent on a yearly basis in the first five months of the year.

The tone-setting Central Economic Work Conference in mid-December said in 2023 China will focus on boosting domestic demand by prioritizing the recovery and expansion of consumption.

"With the optimization of COVID-19 response measures, the confidence of both consumers and market entities has been further boosted, and services-based consumption segments that were hard hit by the pandemic have recovered at a faster pace," said Wang Yun, a researcher at the Academy of Macroeconomic Research, which is affiliated with the National Development and Reform Commission, the country's top economic regulator.

China's consumer market has maintained growth momentum, with the overall growth rate expected to reach more than 7 percent this year, Wang said. Chinese consumers have become more rational and are carefully reviewing their needs, with a key focus on the quality and value of the products they buy, as well as the feelings associated with making a purchase, she noted.

Greater efforts should be made to boost the sales of new energy vehicles in rural areas, accelerate the building of NEV charging infrastructure and provide more support for the recovery of services-based consumption sectors, including tourism and culture, she added.

The recently concluded June 18 shopping carnival, which spans more than three weeks, played a vital role in promoting the recovery of consumption and boosting the economy, experts said.

JD, which initiated the midyear promotional event, said 30 percent of domestic brands saw turnover surge 100 percent year-on-year in the first 10 minutes of the final promotion that kicked off at 8 pm on June 17.

Consumers showed strong interest in a new generation of products featuring innovative technologies. Transaction volume of 4K projectors and augmented reality devices jumped 200 percent and 150 percent, respectively, on a yearly basis, JD said.

Data from Alibaba's Taobao and Tmall platforms showed that 2.56 million small and medium-sized merchants saw their sales from 8 pm on May 31 to midnight on June 17 surpass those of last year. The turnover of more than 305 brands each exceeded 100 million yuan during the period.

Both Tmall and JD did not disclose their final gross merchandise volume during this year's shopping spree.

Ray Hu, a partner at global consultancy EY, said consumers now hope to make wiser purchases through more thorough evaluation of products, with practicality a priority.

Interaction on social media is becoming a prominent part of their purchasing experience, Hu added.

To further unleash consumer spending potential, more stimulus policies are needed to stabilize and expand employment, improve household incomes, boost people's ability and willingness to spend, and spur purchases of big-ticket items such as automobiles and home appliances, said Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School.

The new type of consumption not only helps China's economic recovery, but also drives the development of emerging industries by creating fresh demand, Pan said, underlining the significance of improving products' functionality, optimizing consumers' experiences, and strengthening the competitiveness of Chinese enterprises on the global stage.