China rolls out consumption promotion policies in key sectors

This photo taken on July 3, 2023 shows China's 20 millionth new energy vehicle (NEV) produced by GAC Aion New Energy Automobile Co., Ltd. in Guangzhou, south China's Guangdong Province. (Xinhua/Deng Hua)

Since the beginning of 2023, China's policies to restore and promote consumption have continued to show significant effects, with the overall consumer market showing a positive recovery trend. Automobiles, household appliances, home furnishings, and catering are the key sectors for restoring and expanding consumption, China Securities Journal reported Monday.

Recently, China has been introducing policies successively to promote consumption in the key sectors mentioned above. Both the central and local governments have made multiple deployments to further unleash consumption potential in the second half of the year.

--Automobile consumption potential unleashed

Currently, automobile sector has become a vital driving force for China’s overall consumption growth. According to data released by the China Association of Automobile Manufacturers (CAAM), China's domestic automobile sales from January to June reached 13.239 million units in total, a year-on-year increase of 9.8 percent. On July 3, the production of new energy vehicles in China exceeded 20 million units in total.

"This is a milestone marking the rise of China’s new energy vehicle industry," said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA).

In the second half of 2023, Chinese local governments have introduced a new round of automobile consumption subsidy policies. On July 14, Changsha, Hunan, relaunched its automobile consumption promotion campaigns, with a maximum subsidy of 6,000 yuan per vehicle. Chengde, Hebei, also launched an automobile consumption subsidy campaign recently, boosting automobile sales by nearly 100 million yuan in 10 days.

On June 21, China's Ministry of Finance (MOF), the State Taxation Administration (STA), and the Ministry of Industry and Information Technology (MIIT) jointly announced that China will extend the exemption of purchase taxes on new energy vehicle to the end of 2027 and optimize the tax reduction and exemption ceiling.

On July 21, the National Development and Reform Commission (NDRC), the MIIT, and other departments issued "Several Measures to Promote Automobile Consumption", so as to stabilize and expand automobile consumption, optimize regulations and market environment for automobile purchase and use, and promote the sustainable and healthy development of new energy vehicles.

Chang Tiewei, deputy director of the Department of Employment, Income Distribution and Consumption at NDRC, believes that there is some room for the improvement of automobile consumption.

Regarding the prospects of Chinese automobile market in the second half of 2023, Cui Dongshu believes that the momentum in the first half of the year is expected to play a positive role continuously. "Currently, both the central and local governments are sparing no effort to promote consumption through introducing policies and monetary incentives favorable for automobile consumption," he said.

--Policies promoting home furnishings consumption implemented

Currently, home furnishings consumption has become the second largest household expenditure after automobiles. Sheng Qiuping, deputy minister of the Ministry of Commerce (MOC), pointed out that home furnishings consumption involves various areas, upstream and downstream industries, and a large scale.Taking targeted measures to boost it will be beneficial to consumption growth and economic recovery.

Recently, MOC and other 12 departments jointly issued11 specific measures to promote home furnishings consumption from four aspects, like improving supply quality. It is also proposed to support innovation in business patterns and encourage capable local governments to subsidize rural areas to purchase household appliances and furniture.

Li Yujia, chief researcher at the residential policyresearch center of the Guangdong Planning Institute, believes that it is hightime to consider home furnishings sector as a new focus to stimulate consumption. With China's housing consumption enteringa new era, home furnishings consumption is playing an increasingly important role.

Xu Xingfeng, director general of the Department of Market Operation and Consumption Promotion of MOC, introduced that in the second half of 2023, MOC will organize the "Home Furnishings Consumption Season" campaign nationwide, coordinate all parties to build a production and sales communication platform, optimize consumption supply, strengthen the coordination between central and local governments and cooperation between the government and enterprises, bridge online and offline platforms, and fully utilize the role of expos to release the potential of home furnishings consumption.

-- Catering consumption sees recovery

Since the beginning of 2023, service consumption based on social contact, such as catering consumption, has continued to recover. Recently, data released by the National Bureau of Statistics of China (NBS) shows that in the first half of 2023, the domestic catering revenue reached 2.4329 trillion yuan, a year-on-year increase of 21.4 percent, with the growth rate 7.5 percentage points higher than the first quarter, and 14.6 percentage points higher than that of commodity retailing.

"In the first half of 2023, as passenger flows recovered, abranch of policies to promote consumption have been launched and consumption campaigns have popped up nationwide, which diversified the catering consumption supply and unleashed the vitality of catering market." said an official of the China Cuisine Association (CCA). The official added that holidays and festivals, such as New Year's Day, Spring Festival, and Dragon Boat Festival have all seen a surge in catering consumption.

During the first half of 2023, many provinces and cities have step up effort to boost catering consumption by issuing consumption vouchers. Forcasting the second half, several experts believe that catering consumption is expected to maintain growth.

The official of CCA predicted that during this summer, the number of cross-city travelers will increase significantly, which will contribute to local catering consumption growth.

A research report from Hua Chuang Securities pointed out that in the post-pandemic era, the catering market is developing towards a dumbbell-shaped structure, where both high-end catering and basic needs catering have their audiences and perform well.

(Edited by Wang Wenyao and Gao Jingyan, gaojingyan@xinhua.org)