According to a report from the Central Asian Regional Economic Cooperation Institute, or Carec Institute, some sectors of the Chinese economy, such as consumption, developed better than the others, and the strong growth momentum will continue to bolster the country’s economic revival.
Hans Holzhacker, chief economist of the institute, said China’s economic achievements in 2020 reiterated the country’s need to have a more consumption-based growth model. Household expenditures fell by nearly 4% last year on a yearly basis due to the Covid-19, indicating huge growth potential this year.
“Specifically, it is expected that there will be an increase in demand for high-tech products such as communication equipment, as well as for cosmetics, gold, silver and jewellery, which all grew by double digits in the fourth quarter on a yearly basis. When the pandemic will finally come under control globally, consumption in services such as tourism will be in high demand,” he said.
Data from the Ministry of Commerce said that in 2020, China’s retail sales of consumer goods totaled 39.2 trillion yuan (US$6 trillion), down 3.9% on a year-on-year (y-o-y) basis, which was 7.5 percentage points lower than the yearly declining rate of that of the first half of the year.
“Last year, the country’s retail sales of consumer goods took up 54.3% of the gross domestic product, remaining the bedrock of the stable operation of national economy,” said Qian Keming, vice-minister of commerce, during an earlier press conference.
According to the ministry, amid challenges brought by Covid-19, commodity consumption in 2020 had been recovering month by month. Specifically, retail sales of communication equipment and cosmetics surged by 12.9% and 9.5% y-o-y, respectively.
Meanwhile, service consumption also revived. In the fourth quarter, retail sales in the catering industry grew by 0.2% on a yearly basis, said the ministry.
Cheng Shi, chief economist at ICBC International Holdings Ltd, believes that the accelerated recovery in household consumption will further strengthen the endogenous growth momentum of the Chinese economy. “It will boost the recovery and stable operation of the economy for the whole year.”
China’s effective contagion control measures in the second half of last year helped restore economic momentum in the country and people’s livelihoods. Data from the National Bureau of Statistics showed that the surveyed urban unemployment rate was 5.2% in December, unchanged from the same period in 2019. Nearly 11.86 million new urban jobs were created in 2020, exceeding the average annual growth target under normal conditions between 2017 and 2019.
“The recovery trend may weaken the precautionary savings habit of people, while maintaining the upward trend of consumption that began in August,” Cheng said.
ICBC International said in a recent report that household consumption would be one of the major driving forces for China’s economic growth in the first and second quarters.
“It will return to moderate levels on a quarterly basis, till the annual growth rate settles around 9.2%,” said the report.
Cheng, however, said that the global economy is still facing changes unseen in a century. As a result, short-term variations and long-term transitions could occur at the same time, and the turbulence and complexity of economic signals are even worse than that of last year, he said. ─ China Daily/ANN