BEIJING: Consumption, a key driver of the Chinese economy, is expected to see recovery growth this year as more supportive policies are in the pipeline, said the country’s economic planner.

       China’s retail sales of consumer goods, a vital consumption indicator, rose 12.5% year-on-year (y-o-y) in 2021, putting the average annual growth for the past two years at 3.9%.

       In December, however, the figure posted only a 1.7% y-o-y growth, indicating a pressure of demand contraction, which policymakers have already been alerted to.

       Han Wenxiu, a senior official with the Central Committee for Financial and Economic Affairs, has identified demand contraction along with supply shocks and weakening expectations as challenges facing the world’s second-largest economy.

       Despite difficulties, China has favourable conditions for its economic growth. It has strong resilience, a complete industrial chain, rich human resources, convenient infrastructure, and a massive domestic market, said Han.

       As financial consumption has contributed significantly to China’s economic growth, with the percentage reaching 65.4% in 2021, domestic demand is a strategic underpinning of the country’s economic development.

       Macro adjustments will expand domestic demand to stimulate consumption for the whole year. Jin Xiandong, a spokesperson for the National Development and Reform Commission (NDRC), said the country would continue expanding domestic demand on the basis of effective Covid-19 control.

       As the Spring Festival approaches, the commission has released a notice to boost holiday consumption by ensuring the supply of daily necessities, encouraging contactless services and sales, and promoting entertainment and recreational consumption.

       It called for measures to promote new energy vehicles and smart home appliances in rural areas while strengthening logistics.

       Meanwhile, the commission will guide e-commerce enterprises to hold online sales promotions during the holiday while maintaining market order, said the notice.

       Consumption related to the ice-snow industry, including travel, will be promoted as the Winter Olympics approaches.

       In the retail sector, smart outlets, such as supermarkets, book stores, and pharmacies will step up their pace in entering neighbourhoods, office buildings, and business districts, the notice said.

       Aside from the immediate policy support, the government has also factored in long-term policies, said Jin.

       For instance, supply-side reform would refine product quality and optimise supply to cater to the public’s higher tastes and increasingly diverse demands.

       A supply system featuring better quality and more reasonable product structures will be enhanced, while enterprises will be encouraged to provide more cost-effective goods and services to meet consumers’ need for trading up, he said.

       Fu Yifu, a senior researcher with the Suning Institute of Finance, said there were difficulties in achieving swift, strong growth in the consumer market since it is affected by factors like residents’ income levels, market expectations, consumption willingness, and Covid-19 control. — Xinhua