I spent China's 70-year National Day festivities in Shanghai, China's global financial hub, and Guangzhou, the global trade hub of the Guangdong-Hong Kong-Macao Greater Bay Area. In both, China's massive transition toward consumption and innovation is now increasingly evident.
Like their peers in the United States, Europe and Japan, Chinese consumers are cost-conscious, increasingly discriminate and sophisticated in their spending. Indeed, sales of gold jewelry boomed during the holidays, fueled by gold prices, holiday festivities and the wedding season.
But unlike their counterparts in advanced economies, where the middle-class is shrinking, the Chinese middle income group continues to grow, expand and consume. That is creating great opportunities in China and overseas alike.
The just ended Golden Week is a case in point.
Retail sales 8.5 percent up
China has two Golden Week holidays, for the Lunar New Year sometime in January or February, and the National Day week in early October. Both are seen as barometers for Chinese private consumption, due to gift-giving, family reunions, tourism and retail.
In February, the Lunar New Year showed the slowest increase in years, according to international media. Yet, Chinese retail sales and catering sector still rose almost 8.5 percent on a year earlier.
Prior to the National Day Golden Week, once again, much of international media expected the trade conflicts with the United States to undermine Chinese holiday sales. And again, they were proved wrong. During the holidays, retail sales growth exceeded China's growth rate by almost a half, with online sales soaring even higher.
During the Golden Week, Chinese retail and catering businesses saw sales of $213 billion, up 8.5 percent on the same period last year (spending on consumer services is not yet included, it will be released later in the month). New highlights featured spending on tourism, culture and sports, and "first-store economy;" that is, new brands launching their first brick-and-mortal stores.
And these figures do not include the highly-popular discount sales that follow after the Golden Week.
Tourism revenues rise
Prior to the Golden Week, much of international media expected Chinese consumers to cut back on travel, due to the trade conflicts and weaker yuan. In reality, Chinese people may have spent more than ever before at home and abroad.
During the past week, there were 520 million trips on all modes of transportation, with the number of rail passengers up 5.2 percent on the same period last year, according to the Ministry of Transport. At home, many visited Beijing, Shanghai, Xi'an, Chengdu, Chongqing and Xiamen. Overseas, the top destinations were Japan, Thailand, the Republic of Korea, Vietnam, Indonesia, and Australia.
In the first Golden Week in 1999, only 28 million trips were made, and all of them domestically. During the past week, almost 780 million domestic trips were made, an increase of 7.8 percent year-on-year. It was the greatest holiday migration in history.
Domestic tourism revenues soared to more than $90 billion, an increase of 8.5 percent on an annual basis, according to the Ministry of Culture and Tourism. Alipay, China's leading and smooth online payment platform, confirmed that catering, travel and retail fueled domestic consumption during the holidays.
Currently, one-tenth of the nearly 1.4 billion Chinese population holds a passport for international travel; that's a potential 140 million outbound travelers. With increasing prosperity to travel overseas, that figure is expected to double in the next decade.
No global brand can afford to ignore the Chinese market any longer. In 2019, China's economic growth is likely to be around 6 percent. Yet, in-store sales are estimated at 9 percent and online shopping at 24 percent on a yearly basis, according to KPMG.
Similarly, China's consumer retail market is no longer a dream of the future. Last year, it grew 8 percent year-on-year to $5.3 trillion. The National Day Golden Week is the country's second-biggest shopping bonanza, right after Chinese New Year.
Despite U.S. trade protectionism, Chinese tourists reportedly spent $128 billion overseas in the first half of the year. More than half of that in Asia, one-fourth in the Americas and much of the rest in Europe. The Golden Week sales suggest that a similar pace will prevail toward year-end.
Days ago, the biggest airport in the world was opened in Beijing. It is a prelude to the mid-2020s, when China will surpass the U.S. as the largest aviation market, according to the International Air Transport Association. In two decades, Chinese airports could serve 1.6 billion passengers annually.
As China's middle income group continues to increase and its per capita income grows, domestic and global retail and tourism will be major beneficiaries. China's rise supports economic prospects at home and abroad. As the Golden Week demonstrated, Chinese consumption is now a global force.
The author is Dan Steinbock,the founder of Difference Group and has served at the India, China and America Institute (U.S.), Shanghai Institute for International Studies (China) and the EU Center (Singapore). The views don't necessarily represent those of China Daily.