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New firms buoy consumption

Cheng Yu
Updated: Jul 29,2020 09:09    China Daily

China has seen the number of newly-registered companies surge as firms bet big on the country's pent-up consumption demand and strong economic recovery from the COVID-19 outbreak.

Nearly 230,000 tourism-related enterprises were newly-registered in the nation in the first half of this year, of which more than 55,000 were added in April, sharply higher by 33.4 percent from the previous month, according to Tianyancha.com, a leading business data service firm.

Leisure and entertainment companies witnessed an increase with over 4,800 karaoke-related firms and 4,300 internet cafes newly-registered as of July 22. In the first six months of this year, over 1,600 indoor game-related companies were also newly-registered.

"As the domestic epidemic prevention continued to improve, the resumption of work and production in all walks of life has been steadily progressing. Consumer demand in offline consumption such as tourism, restaurants, and hotels, which was forced to be postponed during the epidemic, began to take off," said Fu Yifu, a senior researcher at the Suning Institute of Finance.

Fu added that the short-term stimulus such as the issuance of consumer coupons in major cities also drove the recovery of the consumer market.

Data from China's National Bureau of Statistics showed that industrial output of the country's service sector expanded by 1.9 percent in the second quarter, reversing the decline of 5.2 percent in the first quarter. The contraction of retail sales also narrowed to 3.9 percent in the second quarter from a decline of 19 percent in the previous quarter.

Liu Aihua, an NBS spokeswoman, noted in a news conference that the nation's economy has overcome the adverse impact of the pandemic gradually in the first half of the year and demonstrated momentum in restorative growth with great resilience and vitality.

Among all the recovering sectors, new online education and healthcare companies saw the most explosive growth. In the first half of this year, Tianyancha.com said over 280,000 online education-related companies were newly-registered, meaning that there are more than 150 new online education firms every day on average.

The country also added more than 680,000 healthcare-related companies during the same period, which marked an increase of 18.06 percent year-on-year. Among them, 80,000 were in Guangdong province alone and 71,000 were located in Shandong province.

"The epidemic has accelerated people's acknowledgment and acceptance for online education in China and around the world. It has moved up the sector by at least 10 years," said Tom Dretler, co-founder and CEO of Shorelight Education.

"We will definitely beef up our presence here for it brought us opportunities. As parents, students and educators learned that there was a solution that would allow them to return to school quickly, even back to normal in the future, more interactive courses or teaching models that mixed online and offline will be adopted," he said.

Wang Yiming, a senior economist and a member of the National Committee of the Chinese People's Political Consultative Conference, said however that the economic recovery is still unbalanced, as the supply side recovered faster than the demand side while investment recovered faster than consumption.

"More efforts are needed to boost domestic consumption demand in the second half of this year through stabilizing employment, ensuring people's livelihood, increasing subsidies for low-income families and stimulating consumption policies to further boost residents' willingness and ability to consume," Wang said.

"The consumer consumption demand can also be accelerated through the nation's efforts in resuming businesses including catering, shopping malls and life service industries as well as the integration of online and offline consumption," he added.

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