China's Consumption To Have Huge Potential in Long Run

China’s final consumption contributed 76.2 percent to its economic growth in 2018, becoming the primary driver of economic growth for five years in a row, with the other two being investment and exports, reported the newspaper. That continued into this year, in part because the country has rolled out a series of policy measures to stabilize consumption, the official noted. 

Interviewed by the newspaper Commerce News, Liu Ying, researcher at the Chongyang Institute for Financial Studies, Renmin University of China, pointed to the inherent advantages and huge growth potential of consumption in China, as compared to investment and exports.  

China has a 1.4 billion population – including the over 400 million medium- and high-income earners, and Chinese income levels and living standards are increasing across the board, Liu said. 

“This is not about quantity, but also a leap in quality,” she said. The middle class present higher requirements for consumption of culture-related and services, which is driving upgrades in the service sector, financial investment and information services. New forms of business and models have emerged and will continue to emerge to meet the multi-level, diverse market demands, she predicted. 

Liu proposed that businesses should engage in structural reform to upgrade and adapt to a market after consumption upgrade. The authorities should strengthen supervision of consumption activities, prevent fake and inferior-quality products from making it to the market, and guarantee full space for quality, green products.

The country needs also to deepen reform and opening-up, especially for financial services, tourism, healthcare services and education where room for growth is larger, she said, including taking further, prudent measures to gradually open up the markets.