The Paper.cn:

In 2023, while the total retail sales of consumer goods showed a gradual recovery trend, China still faces the challenge of insufficient demand. What's your assessment of China's consumption market performance in 2023? Additionally, what are your expectations for 2024, and do you anticipate a sustained consumption recovery? Thank you.

Kang Yi:

Thank you for your questions. The first question pertains to the performance of China's consumption market in 2023, while the second one refers to expectations for the consumption market in 2024.

Please allow me to first introduce the performance of the consumer market in 2023. Generally speaking, it displayed an encouraging rebound momentum last year. In the previous three years, the consumer market was severely impacted by the COVID-19 pandemic, with significant restrictions on contact-and-gathering-based consumption. Since China optimized its pandemic response measures, the country's economic and social operations have returned to normal, and the consumption sector has experienced a positive rebound trend. Consumption, featuring numerous hotspots and highlights, became an important driving force in boosting the entire year's economic recovery. There were four notable characteristics. First, the scale of consumption reached a new high. In 2023, the total retail sales of consumer goods hit a record high to more than 47 trillion yuan. Second, consumption once again became the main force in promoting economic growth. In 2023, final consumption expenditure contributed 4.3 percentage points to the economic growth rate, up 3.1 percentage points year on year. It constituted 82.5% of economic growth, an increase of 43.1 percentage points year on year. This signifies that the fundamental role of consumption has become more significant. Third, services consumption recovered rapidly, another highlight of the consumption rebound. The retail sales of services in 2023 grew by 20% over the previous year, 14.2 percentage points faster than the retail sales of goods. The per capita consumption expenditure on services increased by 14.4%, accounting for 45.2% of per capita consumption expenditure, 2 percentage points higher than the previous year. Fourth, the structure of household consumption continued to upgrade. Thanks to improved living standards and steadily increasing incomes, the country's household consumption structure is currently in a period of rapid upgrading.

We predict that consumption will maintain decent growth in the next stage since there are a number of favorable conditions to support its recovery. The favorable conditions are as follows: First, the consumption potential is still vast. China's super-large market, with a population of over 1.4 billion, the coordinated development between urban and rural areas, the steady advancement of urbanization, and the upgrading of the consumption structure, all provide broad space for consumption growth. Additionally, the consumption potential in the medical and healthcare sectors is likely to be further unleashed. Second, the foundation of consumption is solidified. Income is both the precondition and the foundation of consumption. As the employment situation generally improves amid economic recovery, residents' incomes are likely to maintain steady growth, providing a solid foundation for the enhancement of people's consumption capacity. Third, bright spots in consumption continue to emerge, including digital consumption, green consumption, health consumption, entertainment consumption, as well as consumption in smart homes, tourism, sports events, and "China-chic" products. All of these are continually improving the quality and expanding the scale of the consumption market. Fourth, relevant policies have been initiated to stimulate consumption. Local governments and departments continuously prioritize recovering and expanding consumption. Policy incentives have been rolled out to stabilize and expand traditional consumption, cultivate new consumption, and improve the consumption environment, playing a positive role in stabilizing the consumption market and promoting consumption recovery. Overall, we remain optimistic about the consumption trend in 2024. Thank you.