China will expand brick-and-mortar and virtual shopping infrastructure to enhance the quality of products and services this year, and reduce or remove import tariffs on certain consumer products to facilitate the transition, senior commerce officials said.
Wang Bingnan, vice-minister of commerce, said the government will adopt a combination of measures to stimulate domestic consumption capacity, including creating new forms of brick-and-mortar and online shopping, and improving logistics facilities in China’s rural areas.
In addition to reducing tariffs on foreign goods such as pharmaceuticals, cosmetics, food and wine, Wang said one of the major tasks for the ministry is to renovate the vitality of China’s pedestrian streets this year.
According to the ministry, a number of measures were piloted in 11 pedestrian zones across the country late last year, including Chengdu’s Chunxi Road, Beijing’s Wangfujing Street and Shanghai’s Nanjing Road. Annual pedestrian volume in these renewed zones is estimated to exceed 1 billion.
“These moves are a practical response to the government’s call to form a stronger domestic market,” he said, adding that the first group of pilot pedestrian streets will play a leading role to establish a benchmark nationwide.
Local governments must integrate this task into their priority work schedule to push pedestrian streets to be more dynamic and indispensable, boosting the ongoing national consumption upgrade and the new round of reform and opening-up, Wang said.
Wang Bin, deputy director-general of the Commerce Ministry’s department of market operation and consumption promotion, said consumption is expected to contribute 65 percent of China’s economic growth in 2019, with total consumer good retail sales growing by 9 percent this year, thanks to tax reform, innovation in the e-commerce sector and other industrial policies.
To stimulate consumption, top-tier cities such as Beijing and Shanghai have rolled out plans to expand and upgrade commerce facilities, such as building more suburban small, upscale hotels and shopping malls, and hosting domestic and international expos, as well as encouraging fashion consumption and the debut of global products.
Beijing plans to construct shopping centers near airports and promote winter sport consumption, along with hosting the 2022 Winter Olympics, according to the municipality’s development and reform commission.
Shanghai will also build specialized and world-class shopping streets and make the city a popular place for consumers to purchase high-end products, as indicated by the city’s action plan for boosting consumption from 2018 to 2020.
Guo Xin, a marketing professor at Beijing Technology and Business University, said Chinese millennials have more purchasing power than middle income earners because many of their parents own an apartment and are not weighed down by excessive accommodation or mortgage concerns.
“Domestic consumers’ demand for healthcare, fashion, jewelry, dairy and agricultural products, digital household appliances and science and technology services will continue to surge in the long run,” said Guo, who stressed that European and United States companies have already begun to invest more in China’s research and development, design and sales channel expansion and forming new partnerships with domestic firms.
Growth points will now present themselves as China’s consumption economy becomes more sophisticated, he said.