China's consumer spending has been on track to fully recover from the ravage of COVID-19, with proven resilience in the tests in 2020 and new traits to watch this year.
Signs of a consumption revival have become increasingly prominent in China, as retail sales rose by 4.6 percent year on year in the fourth quarter. It bounced back from the dramatic contraction in the first two quarters and displayed sustained recovery momentum.
Steady consumption recovery is not the whole story, however. The unprecedented epidemic has had a profound impact on Chinese consumers' shopping habits and preferences. Some of these implications will likely persist even in the post-epidemic era.
The following break-down of official data sheds light on how China's consumption recovery has unfolded and what new bright spots are coming into sight.
China's online shopping has been on a tear, and this boom prevailed even amid the COVID-19 epidemic. Store shutdowns and social-distancing made Chinese consumers more dependent on online platforms for shopping.
China ranked as the world's largest online retail market for an eighth straight year in 2020, with online sales surging by 14.8 percent year on year to 9.8 trillion yuan (about 1.52 trillion U.S. dollars).
Livestreaming served as a catalyst, with influencers sitting in front of cameras and promoting products via their social media channels.
Official data showed more than 20 million livestreaming marketing activities took place in 2020. It made a legion of leading influencers household names for selling real bargains to savvy consumers.
TOP-NOTCH AUTO SALES
The auto market continues to be a highlight of China's consumption in 2020. With 25.31 million units sold last year, China topped the world in auto sales for 12 consecutive years.
As the world's largest auto market, China is actively pursuing green growth in its massive auto industry. New energy vehicles (NEV) sales in the country surged to a record high of 1.37 million units last year, up by 10.9 percent year on year.
In November last year, China unveiled a development plan for its NEV industry from 2021 to 2035, expecting purely electric automobiles to dominate new purchases by 2035.
Market observers expect China to continue spearheading the global auto industry's shift to NEVs. A Citic Securities report predicted NEV sales would soar by 54 percent year on year to 2.1 million units in 2021.
FANCY FOR FOREIGN GOODS
Impacted by the epidemic-induced travel restrictions, Chinese consumers no longer traveled as much to buy international brands abroad, but their thirst for foreign goods is still real.
Official data showed China's imports of consumer goods rose by 8.2 percent year on year to 1.57 trillion yuan in 2020, accounting for 11 percent of the country's total value of imports.
The growth partly resulted from the country's expanding cross-border e-commerce business, which rocketed by 31.1 percent from a year ago in aggregate import-export volume.
Policy stimuli to drive consumer goods imports function as another growth driver. For instance, China's island province of Hainan increased its annual tax-free shopping quota from 30,000 yuan to 100,000 yuan per person starting July 1, 2020. Duty-free category goods have also been expanded, with some electronic products such as mobile phones and laptops added to the list.
Duty-free stores in Hainan raked in 32.74 billion yuan in sales last year, 1.27 times higher than that in 2019.
NEW VISTA IN THE RURAL REGIONS
China's rural areas have emerged as a new frontier for businesses to tap purchasing power.
One sign is that consumer spending is recovering faster in rural areas than in cities amid the national combat against COVID-19. In the fourth quarter, retail sales in rural areas surged by 5.6 percent year on year, 1.1 percentage points higher than that in cities.
Analysts expect China's rural market potential to unleash further as the country is pushing forward rural vitalization after winning the tough war against absolute poverty. More investment is likely to consolidate rural e-commerce infrastructure.
E-commerce in China's rural areas has maintained sound growth momentum. In the first three quarters of 2020, online retail sales in the rural areas reached 1.2 trillion yuan, jumping by 7.8 percent year on year.
The government has decided to further improve weak links in rural consumption, such as expanding the coverage of e-commerce and express delivery. It will also enhance cold-chain logistics facilities and leveraging technologies such as big data to ensure the supply of agricultural products. Rural consumption would likely open up a brighter prospect as a result of these measures.