Why this is important to Wisconsin businesses: As policies are enacted to stabilize the economy after the pandemic's onset, consumption will in turn boost demand for imports.
In recent years, domestic consumption has played a growing role in China’s economic growth, with consumer spending accounting for 57.8% of China’s GDP in 2019, and the growing middle class with its massive spending potential contributing to this growth.
According to a report from Phoenix News Media, China’s middle class population will reach 700 million this year. Urban consumers are now the main driver of Chinese economic growth, with their spending accounting for more than 60% of China’s overall GDP growth. Meanwhile, according to the Boston Consulting Group, China’s consumer economy is projected to grow to $6.5 trillion this year.
According to the data from the National Bureau of Statistics, China’s per capita consumption expenditure in Q1 of 2020 reached 5,082 yuan ($726), down from 5,538 yuan ($791) for the same period a year prior. Shanghai, with per capita consumption of 10,410 yuan ($1,471) in Q1 of 2020, ranked highest on the list of mainland China's 31 provinces and regions. The capital city, Beijing, and Zhejiang Province in the east placed second and third on the list, with 10,003 yuan ($1,429) and 7,891 yuan ($1,127) per capita consumption expenditure, respectively. The annual national per capita consumption expenditure in 2019 was 21,559 yuan ($3,080).
China has just celebrated the five-day Labor Day holiday after reopening from the novel coronavirus outbreak, which forced the entire tourism industry to shut down for more than three months. Around 104 million people traveled to domestic tourist sites during the holiday week, according to the country’s culture and tourism ministry, which reported that the tourist holiday generated around $6 billion in revenue. Although international travel is discouraged, people were still busy shopping around the world: Tmall recorded a year-on-year expansion of 41% in sales of imported goods during the first three days of the holiday.
To support economic recovery and growth, Chinese policy-makers have taken strong steps to boost consumption and stabilize employment. According to media reports, as of May 3, local governments, merchants and companies in more than 90 cities across the country had issued over 11 billion yuan ($1.6 billion) worth of vouchers to boost consumer spending and domestic demand. Shanghai, for example, officially launched a massive consumption-boosting campaign on May 4, as merchants distributed shopping coupons to spur spending and resuscitate the local economy. Dubbed the May 5 Shopping Festival, the fair also kicked off the Global Promotion Convention of Shanghai as an international shopping magnet. The festival, under the municipal government, will run through all of May and June, spanning key festivals such as Labor Day, Children's Day and the Dragon Boat Festival. Joined by many leading commercial enterprises, e-commerce platforms and major international and local brands, the shopping spree will host more than 130 key product campaigns and over 700 special activities.
In the 24 hours following the launch of the festival in the evening of May 4, combined sales in the city's online and offline channels hit 15.68 billion yuan ($2.24 billion), according to data from China UnionPay, Alipay and WeChat.
Data from Shanghai can be considered an economic indicator for broader consumer spending. For three years in a row, Shanghai has maintained its position as the nation's top city for retail sales of consumer goods. In 2019, Shanghai reported total sales revenue of 1.35 trillion yuan ($191 billion) in consumer spending.