China in a Decade: Consumer market's high-quality development, capacity expansion, and circulation innovation

Since the 18th CPC National Congress, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, China has introduced various policy measures to expand domestic consumption and further grow its consumer market. Historic achievements have been scored over the past 10 years – the consumer market has expanded with an ever-increasing sales volume, optimized consumption structure, enhanced commerce system, and improved circulation efficiency and channels. Consumption has become a key driver of economic growth, and a new development pattern is taking shape in China.

I. The consumer market has steadily expanded with its fundamental role strengthened

1. Strong development momentum with expanding market size

- Scale of the consumer market continues to expand, with total retail sales of consumer goods exceeding 30 trillion yuan and 40 trillion yuan in 2016 and 2019, and reaching a record high of 44 trillion yuan in 2021, 2.1 times that of 2012.

- The consumer market is showing great resilience. After the outbreak of the Covid-19 pandemic in early 2020, China has coordinated Covid-19 containment and socio-economic development, and steadily restored the order of the society, and market sales have since gradually improved. In 2021, total retail sales grew by 12.5% over the previous year, and in 2020 and 2021, total retail sales grew by an average 3.9%.

2. Faster growth in consumer spending has made consumption a main driver of economic growth

- In 2021, China’s final consumption rate reached 54.5%, 3.4% higher than in 2012.

- From 2013 to 2021, the average annual growth in residential consumption expenditure exceeded 9%, and the proportion of residential consumption expenditure in final consumption expenditure remained stable at around 70%, and in 2021 the proportion hit 70.7%.

- From 2013 to 2021, the average annual contribution of final consumption expenditure to economic growth exceeded 50%. In 2021, the contribution rate hit 65.4%, 51.7% higher than that of gross fixed capital formation (GFCF), making it the No.1 driving force of economic growth.

II. Urban and rural markets grow in synergy with optimized regional structure

1. Steady growth of urban consumption, and expanded consumption at county and township levels

- The consumption market in urban areas has maintained steady growth, with retail sales exceeding 27 trillion yuan in 2021, and an average annual growth of 8.1% from 2013 to 2021.

- Consumption at county and township levels is growing at a better pace, with retail sales of consumer goods in townships and villages reaching 10.8 trillion yuan and 5.9 trillion yuan respectively in 2021, with an average annual growth of 10.4% and 9.8% respectively from 2013 to 2021, 2.3 and 1.7 percentage points higher than that of urban areas; the proportion of total retail sales of consumer goods in townships and villages in total retail sales increased from 34% in 2012 to 38% in 2021.

III. Emerging types of consumption unleashing demand for consumption upgrading

1. Online consumption flourishes and green consumption continues to rise

- In 2021, total business volume of the postal industry (indicative of express logistics business) exceeded 1.3 trillion yuan, with an average annual growth of over 50% from 2013 to 2021.

- Total online retail sales of physical goods amounted to 10.8 trillion yuan, an increase of 12% over the previous year; accounting for 24.5% of total retail sales of consumer goods, an increase of 15.3 percentage points over 2014.

- From 2015 to 2021, online retail sales of physical goods grew at an average annual rate of more than 20%. In 2020, online sales registered a robust growth despite the decline in total retail sales of consumer goods, with online retail sales of physical goods amounting to 9.8 trillion yuan, up 14.8% over the previous year.

- Green consumption is developing vigorously. According to the China Automobile Dealers Association, about 3 million new energy passenger cars were sold in 2021, more than 25 times the number in 2015, with an average annual growth of over 70% from 2016 to 2021.

2. Upgraded consumption structure and robust growth of bulk commodities

- In 2021, there were nearly 300 million vehicles owned by residents nationwide, with an average annual growth of 11.6% from 2013 to 2021.

- In 2021, there were 41.8 vehicles for every 100 households, 2.5 times more than in 2013.

3. Rising service consumption, with food and beverage consumption growing at a faster pace

- In the per capita consumption expenditure of residents from 2013 to 2021, educational, cultural and recreational spendings grew at an average annual speed of more than 8%, in which the 2021 figure saw a year-on-year growth of 27.9%.

- Transportation and communications spendings grew at an average annual rate of 9%, in which the 2021 figure saw a year-on-year growth of 14.3%

- In 2021, restaurant revenues exceeded 4.7 trillion yuan, twice as much as in 2012, with an average annual growth of 7.7% from 2013 to 2021.

IV. Commerce circulation continues to improve with quality growth of the consumer market

1. The commerce system has steadily improved, and trade enterprises are increasingly digitalized

- In 2021, there were more than 40,000 enterprises above designated size in the wholesale and retail, accommodation and catering sectors that were carrying out their business online, accounting for 12.4% of all enterprises above designated size, an increase of 6.5 percentage points over 2012.

2. Diverse market entities with emerging new business models

- In 2021, the total number of chain retail shops nationwide reached 292,000, up 51.6% over 2012; their sales increased by 8.3% over 2012. In 2021, there were a total of 43,000 chain restaurants nationwide, 1.4 times of that in 2012 and their turnover increased by 96.8% over 2012.