China is gradually shrugging off the negative impact of the pandemic, as official data showed that retail sales in the first two months of 2023 expanded, following China’s optimization of its COVID-19 response.
Chinese experts predicted that retail sales will continue to increase, given concrete government measures to boost consumption.
Retail sales totaled 7.71 trillion yuan ($1.12 trillion) in January and February, a year-on-year increase of 3.5 percent, data from the National Bureau of Statistics (NBS) showed on Wednesday. Retail sales fell 1.8 percent in December.
The catering industry experienced a rapid recovery, with annualized growth of 9.2 percent in the first two months, compared with a decrease of 14.1 percent in December.
“The rebound of consumption was a major bright spot of China’s economic operations in the first two months of this year,” Fu Linghui, a spokesperson of the NBS, told a press conference in Beijing.
The fast recovery came amid the rebuilding of consumers’ confidence, and on-site consumption has rebounded since China revamped its COVID-19 management in light of the evolving situation, Zhou Maohua, an economist at Everbright Bank, said told the Global Times on Wednesday.
The retail, catering and travel sectors have seen a surge in demand, and the boost from China’s Spring Festival holidays also helped lift consumption, Zhou said.
The NBS also released other statistics on Wednesday, such as the total value added of industrial enterprises above the designated size, fixed-asset investment and employment, which Fu said showed that “China’s overall economic performance is showing a trend toward stabilization and recovery.”
China has set a GDP growth target of about 5 percent in 2023, with a CPI target of about 3 percent, according to this year’s Government Work Report, which was delivered at the first session of the 14th National People’s Congress.
China will seek to expand domestic demand in 2023, prioritizing the recovery and expansion of consumption, according to the report.
The key to economic growth is lifting domestic demand, as the external environment remains uncertain and volatile, Fu said. Support measures have been rolled out nationwide, such as consumption promotions and vouchers for vehicle purchases.
Vehicles occupy an important position in China’s consumption, accounting for approximately 10 percent of retail sales, according to a report released by Fitch Bohua on Wednesday.
Some carmakers have launched subsidies this month to improve sales, and Fitch Bohua believes that automobiles will remain the primary big-ticket spending item this year, with more preferential policies to come. Promoting consumption is high on the government’s agenda this year, as the annual Central Economic Work Conference held in mid-December noted that the country would prioritize the recovery and expansion of consumption.
A State Council executive meeting held in late January also urged prompt measures to promote an early recovery of domestic consumption to revive the economy. Boosted by this positive outlook, local governments have been moving to unveil an array of pro-consumption measures designed to fuel the growth of specific spheres.
Cities such as Beijing, Shanghai and Zhengzhou, Central China’s Henan Province, have announced detailed plans to offer consumption coupons, which will nurture sales of vehicles and home appliances, experts said.