China’s NDRC vows measures to boost domestic demand, as consumption recovery expected
Retail sales down in Nov, but consumption recovery expected in 2023
Published: Dec 15, 2022 08:51 PM Updated: Dec 15, 2022 08:42 PM

People shop at a market in Qiandongnan Miao and Dong Autonomous Prefecture, Southwest China’s Guizhou Province on December 13, 2022. After the optimization of epidemic prevention and control measures, residents’ work and lives are back to normal. Photo: IC

People shop at a market in Qiandongnan Miao and Dong Autonomous Prefecture, Southwest China’s Guizhou Province on December 13, 2022. After the optimization of epidemic prevention and control measures, residents’ work and lives are back to normal. Photo: IC

China’s National Development and Reform Commission (NDRC), the country's economic planner, on Thursday released an action plan to boost domestic demand during the 14th Five-Year Plan period (2021-25), as the nation strives to boost its recovery and realize high-quality growth amid a global economic downturn.

Though the current COVID-19 resurgence has inevitably dampened people’s enthusiasm for consumption in the short term, the momentum of the consumption sector persists and is expected to significantly boost economic growth next year, experts said on Thursday.

The implementation plan was rolled out to further detail key tasks set by a sweeping guideline for expanding internal demand, which was released by the State Council, China’s cabinet, on Wednesday. With long-term goals extending to 2035, the guideline seeks to see the scale of consumption and investment hit new levels and a sound domestic demand system fully established.

The NDRC vowed to firmly adhere to the strategy, accelerate the cultivation of a sound domestic demand system, and create new demand through innovation-driven and high-quality supply, so as to achieve a high-level dynamic equilibrium between supply and demand. 

The NDRC plans to comprehensively promote and accelerate the upgrading of consumption, boosting consumption in areas such as the services sector and low-carbon products. It also plans to optimize investment constructure, create new investment opportunities, and promote coordinated development between urban and rural areas so as to unleash potential demand.

It also vowed to increase the quality of supply in a bid to better meet demand, and to improve the modern market and distribution systems so that supply and demand could be better connected.

The economic planner vowed to further deepen opening-up, firmly promote common prosperity and enhance the security capacity in the areas of food and energy.

Domestic consumption has become increasingly crucial for China’s economic recovery from the COVID-19 pandemic as well as long-term high-quality development for the coming years and decades, analysts said.

China’s optimized COVID-19 response has been a strong boost for the economic recovery, paving the way for a widely expected rebound next year, Cong Yi, dean of the School of Marxism at the Tianjin University of Finance and Economics, told the Global Times on Thursday.

Though the ongoing Omicron resurgence is mounting pressure on consumption, it will be a short-term headwind, and it is expected that the consumption sector could resume its major role in promoting economic growth next year, Cong noted.

Affected by the COVID-19 epidemic and other factors, retail sales recorded a 5.9-percent year-on-year decline to 3.86 trillion yuan ($554 billion) in November, according to data released by the National Bureau of Statistics (NBS) on Thursday.

Retail sales for the first 11 months of the year came in at 39.92 trillion yuan, down 0.1 percent year-on-year.

Though the consumer market was under obvious pressure, people’s consumption demand has been steadily released under China’s optimized COVID-19 prevention measures, and the consumer market will continue to show resilience, Fu Jiaqi, an NBS statistician, said in a statement.

Online consumption has seen faster growth. Online retail sales grew by 6.4 percent year-on-year in the first 11 months, significantly faster than growth in on-site sales, accounting for 27.1 percent of total retail sales, an increase of 0.9 percentage points over the January-October period. 

This further boosted the growth of the express delivery sector, Fu noted.

“Expanding internal demand is of great significance for China’s construction of the ‘dual circulation’ development paradigm, which takes the domestic market as the mainstay while letting the internal and external markets boost each other,” Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times.

Against the backdrop of weakening external demand and the US’ ill-intended “decoupling” push, boosting domestic demand is crucial to cope with the risks and ensure long-term growth, Dong said.

China has great advantages of being both a manufacturing hub and a colossal market around the world, experts said, suggesting that producers should better learn the demand of domestic buyers and promptly adjust their strategies so as to seize the opportunity of the consumption upgrading of Chinese consumers.