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Consumption becomes top economic powerhouse

Updated: Dec 30,2015 4:47 PM Daily

Consumption has become the top powerhouse for China’s economy, and its growth is gathering new momentums, according to experts and statistics.

China’s final consumption expenditure in the first three quarters contributed 58.4 percent of the GDP growth, rising by 9.3 percentage points year-on-year.

Total retail sales of consumer goods increased by 10.6 percent from January to November, and the figure for the whole year is estimated to be about 10.7 percent.

“The role of consumption as the top powerhouse for national economy has been basically established,” said Zhao Ping, a researcher at the China Council for the Promotion of International Trade.

Meanwhile, the driving forces of consumption growth are changing.

According to a report on consumption market development released by the Chinese Academy of International Trade and Economic Cooperation, engines of consumption have shifted from commodity to service consumption and expanded from urban areas to rural areas.

Statistics show that the growth rate of consumption in rural areas has surpassed urban areas three years in a row.

Moreover, experts say that online retail businesses further unleashed the potential of consumption.

Data from the National Bureau of Statistics show that online retail sales of China’s physical commodities increased by 33 percent year-on-year from January to November, accounting for 10.6 percent of total retail sales of consumer goods.

“Online retail echoes the trend of consumption upgrading. It meets consumers’ personalized and fragmented demands, which is also the very direction of transformation and upgrading of the manufacturing industry,” said Kang Yan, a partner at an international marketing consulting firm.

The State Council issued a series of policies this year to expand consumption, pointing out six key areas for future consumption upgrading, including service, information, green, fashion and quality consumption as well as consumption in rural areas.

However, despite enormous potential in the six key areas, Zhao said that there is also a bottleneck in supply, and institutional barriers must be broken down.

Currently, China has been pushing forward urbanization of the population to expand the consumer group and unleash the repressed consumption potential through institutional reforms.

“The 13th Five-Year-Plan period (2016-2020) will definitely see a more prominent leading role and contribution of consumption for economic growth,” said Zhao.

“Consumption upgrading brings about industrial upgrading, which thus boosts quality, effective and sustainable development of the economy.”