Retail seen partly offsetting slide in investment, exports
Consumption has become a major driver for China's economy in 2015, the Ministry of Commerce (MOFCOM) said on Sunday, with investment and exports having remained subdued during the year.
The nation's total retail sales are expected to top 30 trillion yuan ($4.63 trillion) in 2015, ranking second after the US, according to a MOFCOM posting on its website.
Consumption is expected to account for nearly 60 percent of China's economic growth in 2015, MOFCOM said, compared with a ratio of 51.2 percent in 2014.
Online retailing has been a major aspect of consumption, with Chinese consumers becoming increasingly used to shopping online. In the "Singles' Day" shopping spree on November 11, total transactions on Alibaba Group's Tmall platform surged 59.7 percent year-on-year to nearly 91.22 billion yuan.
Total online retail sales in 2015 are expected to top 4 trillion yuan, according to MOFCOM, giving China the No.1 ranking in the world for the third consecutive year.
Though the e-commerce boom has posed a challenge for brick-and-mortar stores, experts noted that its pros far outweighs the cons.
"E-commerce not only boosts consumption; it also benefits related services, such as the express-delivery sector," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under MOFCOM, told the Global Times Sunday.
Rising status
Consumption is an increasingly important growth engine for the Chinese economy, as two of the other main drivers - investment and exports - have lost momentum in 2015. In the first 11 months, retail sales grew 10.6 percent year-on-year and the growth rate has been rising steadily since May this year. Online retail surged 33 percent during the period, MOFCOM data showed.
Meanwhile, total fixed-assets investment rose by 10.2 percent year-on-year in January-November, well below the rate of 15.7 percent in 2014. And growth in foreign trade fell into negative territory, with the total volume dropping 7.8 percent on a yearly basis during the period.
"Though traditional consumption items like housing and autos did not perform well, a number of new growth points have emerged, such as cultural and tourism spending," Xu Hongcai, director of the Economic Research Department at the China Center for International Economic Exchanges, told the Global Times Sunday, adding that consumption will play an increasingly important role in the future.
Policy support
The central government has launched a series of measures to boost consumption in 2015. In September, the State Council announced that the purchase tax for cars with an engine capacity of 1.6 liters and below would be halved from October 1 till the end of 2016.
Boosted by the policy, growth in auto sales rebounded to 19.99 percent year-on-year in November, compared with a meager rate of 2.1 percent in September.
In terms of the housing sector, traditionally a major consumption item, more favorable policies are also expected, analysts said. The Central Economic Work Conference, which concluded on December 21 and set the tone for macroeconomic policy in 2016, marked destocking in the real estate sector as a priority, with developers being encouraged to cut prices in order to boost sales of unsold property. Migrant workers will also be encouraged to buy properties in cities.
China's economic growth slowed to 6.9 percent in the third quarter of the year. For the whole of 2015, analysts said that the policy support could help it reach the government target of rising by "around 7 percent."
But the bright points in the economy, such as the resilient performance in consumption and new services sectors, can only partially offset the downward pressure from the slowdown in manufacturing and real estate investment, and China's economy could slow further to 6.6 percent growth in 2016, J.P. Morgan said in a research note sent to the Global Times on December 15.
"Though consumption still has further room to grow, efforts should also be made to boost investment to stabilize growth," Xu noted.
