Editor’s note: Lu Jianfei, a special commentator on current affairs for CGTN, is a senior consultant at State Grid Energy Research Institute and specializes in energy, state-owned enterprise reform and corporate governance. She holds a doctorate in management from Renmin University of China. The article reflects the author’s opinions and not necessarily the views of CGTN.
The Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting on September 26 to analyze and study the current economic situation and make further arrangements for economic work. It was agreed at the meeting that the Chinese economy had posted generally stable performance this year, making progress while ensuring stability.
The country should effectively implement existing policies, step up efforts to roll out incremental policies, further make policy measures more targeted and effective, and strive to accomplish the targets and tasks for this year’s economic and social development.
China’s central bank, top securities regulator and financial regulator have already announced a raft of monetary stimulus, property market support and capital market strengthening measures to boost the country’s high-quality economic development on September 24.
Apparently, the stimulus package is working effectively. The Chinese stock markets showed robust recovery buoyed by the policies. The Shanghai Composite Index gained around 20 percent by the end of September, with the Shenzhen Component Index up around 25 percent. The combined trading value at the Shanghai and Shenzhen exchanges hit a new single-day record of 2.6 trillion yuan (about $370 billion) on September 30.
The Chinese consumer market also showed increasing confidence consolidated by the stimulative policies. Tourism and home appliance consumption recorded new highs during the holiday. The latest figures from the Ministry of Culture and Tourism show that domestic attractions received 765 million visits during the Golden Week. That was up 5.9 percent year-on-year and an increase of 10.2 percent compared with the same period in 2019, before the COVID-19 outbreak.
The surging consumption is illustrated in two ways. Firstly, culture consumption has become a new major trend in the market, especially for young consumers. According to a study by The Harris Poll (2019), Generation Z (people born from 1995 to 2009) values experiences over material goods. They prioritize culinary exploration and historical experiences. Driven by young consumer groups, cultural consumption has become a new trend.
During the national holiday, Chinese traditional culture tourism and red tourism showed explosive growth with the support of patriotic enthusiasm. Ctrip data showed the average daily order volume at classic red tourism scenic spots across the country increased by 70 percent year-on-year during the Golden Week. And Yalu River Broken Bridge, the National Museum of China, Yuhuatai and Sun Yat-sen Mausoleum Scenic Area had become the most popular red tourist attractions. This reflected Chinese people’s strong confidence in the country’s future development; and it will greatly enhance the patriotic enthusiasm of the people which make them more willing to inherit the red spirit.
Secondly, the role of policy guidance has been highlighted. With the main line of promoting consumption, many provinces across the country have intensively introduced pro-consumption policies and made every effort to promote the development of the consumer market. This has played an important supporting role in boosting consumer confidence, driving industrial development, and stabilizing the rebound in consumption. Consumption market data has shown that driven by policies and measures such as exchanging old goods for new ones and issuing consumer vouchers, consumption was booming which demonstrated the resilience and vitality of China’s economy.
As China’s economic development enters a new normal, it is necessary to build a new system of economic circulation and a new mechanism for growth. Only by boosting people’s confidence in the economic prospects, removing institutional obstacles such as irregular market competition and an imperfect consumption environment, can we fully stimulate consumers’ enthusiasm and realize the effective transformation of potential consumption demand into actual growth momentum.
More efforts and policies need to be launched to boost consumption of major commodities such as automobiles and home appliances, and to improve and expand the quality and capacity of service consumption in education, elderly care, child care, and domestic services. China also needs to put consumer promotion at a more prominent position in the next phase.
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