Consumption upgrade is a trending phrase in China. Tariff cuts, more online retail and better services are some of the reasons behind China’s strong consumer spending which is a way to drive global growth.

In the first half of the year, consumption contributed 78.5 percent to China’s economic growth and online retail sales grew more than 30 percent. Data also showed that China’s consumption has contributed 23.4 percent to global consumption growth each year from 2013 to 2016. Meanwhile, tariff cuts which began July 1 are expected to boost consumption.

“I think China has a huge market and potential for consumption and investment,” said Xu Xianchun, an economics professor at Tsinghua University. “We have to improve the quality of Chinese products. Many Chinese go abroad to buy products, that means Chinese purchasing power is increasing. We have to adapt to this need and improve the quality of our goods.”

Jiang Zheng, an associate professor of economics at the Central University of Finance and Economics, also said that China could expand the capacity of production related to consumption.

“For the mid and long term, government could encourage more investment to the education sector or healthcare or age support. Moreover, the government should remove all kinds of barriers to entry or operate production related to consumption,” said Jiang.

The economist added China could cut personal income tax to promote consumption in the short term since more disposable income leads households to consume more.