2017 China Economic Annual Report Card： Consumption Pulls to Open a New Engine

　　According to statistics from the National Bureau of Statistics, the total retail sales of consumer goods in China reached 36.6 trillion yuan in 2017, a net increase of 3.4 trillion yuan over 2016 and a year-on-year increase of 10.2%. This is the 14th consecutive year that the total retail sales of social consumer goods has achieved double-digit growth, and final consumption continues to play a fundamental role in stimulating economic growth.

　　In 2017, the contribution rate of China’s final consumption expenditure to economic growth was 58.8%, down 7.7 percentage points from the previous year. This is mainly because the contribution rate of net exports of goods and services in 2017 increased by 18.7 percentage points over the previous year, and the driving force for economic growth increased significantly.

　　However, although the contribution rate has declined, the position of final consumption expenditure as the main driving force for economic growth has not changed. From 2013 to 2017, the average annual contribution rate of final consumption expenditure to economic growth was 56.2%, the average annual contribution rate of total capital formation was 43.8%, and the average annual contribution rate of net exports of goods and services was almost zero.

　　While consumption is growing steadily, the transformation and upgrading of retail formats is also more obvious. Emerging formats have maintained rapid growth, and the innovation and transformation of traditional physical retail industry has achieved outstanding results, showing a trend of online and offline integration. Online retail continued to grow rapidly on the basis of the high growth rate of last year. In 2017, the national online retail sales reached 7,175.1 billion yuan, an increase of 32.2%. In addition, the operating performance of 5,000 key retail enterprises monitored by the Ministry of Commerce showed a continuous upward trend, with annual sales increasing by 4.7% year-on-year, 0.3 and 0.7 percentage points faster than the first half of the year and the previous year respectively.

　　At the same time, at present, China’s supermarkets, department stores and other retail formats rely on new technologies such as the Internet of Things, artificial intelligence and mobile Internet, and constantly improve the logistics distribution system, which is deeply integrated with e-commerce platforms, and a new retail format that pays more attention to consumer experience and integrates catering, shopping, entertainment, leisure and other functions has emerged.

　　In 2017, China’s Engel coefficient was 29.3%, down 0.8 percentage points from 2016 and 3.7 percentage points from 2012. The consumption structure of residents continued to improve, and consumers’ demand for high-quality and personalized goods continued to increase, which led to the rapid growth of consumption upgrading products. In 2017, the production and sales of household appliances and cosmetics, communication equipment and new energy vehicles, including units above designated size, all increased significantly. Catering, entertainment, cultural leisure and healthy old-age consumption continued to flourish, while shared consumption and experiential consumption developed rapidly. The number of tourists and tourism revenue also increased rapidly.

　　In addition, the stability of consumer prices, the accelerated growth of residents’ income and the improvement of the imbalance in the consumer market have also laid the foundation for further exploring the consumption potential. From the price point of view, in 2017, the national consumer price rose by 1.6% year-on-year, and the growth rate narrowed by 0.5 percentage points compared with the same period of last year. In terms of residents’ income, in 2017, the per capita disposable income of the national residents was 25,974 yuan, a real increase of 7.3% over the previous year, and the actual growth rate was 0.4 and 1.0 percentage points faster than GDP and GDP per capita respectively. At the same time, with the rapid growth of rural residents’ income and the continuous promotion of policies such as precision poverty alleviation and e-commerce into rural areas, the retail sales of consumer goods in rural areas reached 5.2 trillion yuan, up 11.8% year-on-year. Consumption in the central and western regions continued to lead, and the annual sales of key retail enterprises in the western region were 0.5 and 0.4 percentage points higher than those in the eastern and central regions respectively.

　　At present, as China’s economy has gradually entered the stage of high-quality development, China’s consumption has also entered a new stage of development with diversified demand, continuous expansion of scale and structural optimization and upgrading. This requires us to focus on the contradiction between the obvious increase in consumer demand, diversified development and unbalanced and insufficient market supply, create a better consumption environment, cultivate new growth points in the fields of high-end consumption, green and low-carbon, sharing economy, modern supply chain and human capital services, release the potential of consumer demand, and continue to play its basic role in economic growth.