China's total retail sales of consumer goods reached 47.15 trillion yuan ($6.55 trillion) in 2023, an increase of 7.2 percent year-on-year. Of the annual economic growth of 5.2 percent, consumer spending drove 4.3 percentage points, contributing 82.5 percent to the country's annual growth.

In 2023, the service industry recovered quickly from the impacts of the COVID-19 pandemic, coupled with the effective implementation of various policies and measures to expand domestic demand.

That gave a big boost to services consumption. The annual growth rate of retail sales of services surged 20 percent last year, which was 14.2 percentage points higher than the growth rate of commodity retail sales.

In this process, the demand for upgraded and green products continues to be released, promoting the optimization and upgrading of the consumption structure. The quality of products and services has been improved too, providing important support for consumption upgrading. The retail sales of new energy passenger vehicles exceeded 7 million units last year, an increase of more than 35 percent from that of 2022.

At the same time, the urban and rural consumer markets are growing together, and the proportion of the rural markets has increased. In 2023, retail sales of consumer goods in urban and rural areas increased by 7.1 percent and 8 percent year-on-year respectively.

With the continuous improvement of rural transportation, logistics, information and other infrastructure, the construction of the urban-rural integrated market system has accelerated.

But although the consumer market is recovering fast, the comparatively weak demand is still obvious. Affected by the high leverage ratio of the household sector and the rising propensity for precautionary savings, it may still take some time for residents' willingness to consume, spending power and consumer confidence to recover to the pre-pandemic level.

At present, stabilizing employment is an effective means to improve residents' income and promote consumption growth. The focus should be on taking active measures to support the development of enterprises to create more jobs.

The construction of digital consumption infrastructure will not only help the digital transformation of traditional consumption, but also enhance the supply capacity of new consumption and promote the development of new business formats and new models of consumption.

The country should further enrich the content and expand the scale of services consumption to increase its proportion in overall consumption. The focus can be on the development of the cultural tourism consumer market, cultural entertainment and sports industries, medical and health services, etc.

21ST CENTURY BUSINESS HERALD