A consumer picking up vegetables in Nanjing, Jiangsu Province on June 12./ CFP
Editor's note: Liu Ming is an assistant research fellow from the department of economic forecasting of China's State Information Center. The article reflects the author's opinions and not necessarily those of CGTN.
The national Consumer Price Index (CPI) has shown a wave-like upward trend since January. Data released by the National Bureau of Statistics (NBS) on June 12 indicated that the CPI increased by 0.3 percent year-on-year in May. This marks the fourth consecutive month of year-on-year growth.
The CPI fell by 0.8 percent year on year in January, but turned positive in February with a growth of 0.7 percent, fell back to 0.1 percent in March, and rose again in April with a year-on-year growth of 0.3 percent. Price levels are closely related to people's livelihoods and serve as a "thermometer" reflecting the state of the national economy. The CPI's four-month consecutive year-on-year growth also indicates a continued moderate increase in consumer prices, implying a sustained expansion of domestic demand.
Employment and the continuous increase in urban and rural residents' incomes have laid a solid foundation for the release of consumption potential. NBS data shows that in April, the surveyed urban unemployment rate was five percent, down 0.2 percentage point both year on year and month on month. In the first quarter, the per capita disposable income of national residents was 11,539 yuan ($1,590), a real increase of 6.2 percent after deducting price factors, higher than the economic growth rate for the same period.
Tourists gathered in Xiabu Town in Chongqing to watch the performance on June 10./ CFP
Based on international experience, a nation enters an era of consumption dominated by the service industry when its per capita GDP exceeds $10,000. China reached this level in 2019, and by 2023, its per capita GDP had risen to $12,700. Under this context, demand for service consumption continues to be released, with service retail sales growing by 8.4 percent year on year in the first four months, maintaining rapid growth and driving continuous increases in service prices.
Among service consumption, travel and tourism contribute significantly. Notably, tourism demand is shifting from discretionary to essential consumption, particularly among younger generations. The holiday economy remains vibrant, with data from relevant departments showing that during this year's May Day holiday, domestic trips increased by 28.2 percent compared to the same period in 2019, and total travel spending grew by 13.5 percent, indicating strong recovery in travel and tourism consumption.
New products, and scenarios are continually emerging, driving the rise in national consumption. Products and solutions such as smart home devices, new energy vehicles, low-altitude aircraft, and smart sports equipment are rapidly entering the consumer market, leading to explosive growth in consumption. Along with new sales models like instant retail and live-streaming sales developing quickly, online retail sales of physical goods saw an 11.1 percent year-on-year growth in the first four months.
Furthermore, the deep integration of online and offline sales channels and the rapid emergence of new consumption scenarios are driving steady growth in product retail. On one hand, physical retail stores are continuously promoting the integration of digital technology with consumption scenarios to enhance shopping experiences. On the other hand, online retail volume continues to expand. Reflecting the development of the postal and express delivery industries, which are closely related to online shopping, 56.95 billion postal items were delivered from January to April, representing a year-on-year increase of 21.7 percent. Of these, 50.81 billion were express deliveries, a year-on-year increase of 24.5 percent.
IKEA China's first store held a promotion event for the "618 Shopping Festival", and many customers lined up on May 24 in Shanghai./ CFP
Consumer consumption has also been stimulated by related policies. Nationwide trade-in programs for durable goods are currently in full swing, positively impacting the growth of key retail items. According to the Ministry of Commerce, in May, 577,000 scrapped vehicles were recycled, marking a year-on-year increase of 48.9 percent and a month-on-month increase of 16.2 percent. Major e-commerce platforms experienced an 81.8 percent year-on-year surge in trade-in sales of home appliances, driven by continued demand for high-quality, environmentally friendly, and health-conscious products.
As of June 7, the Ministry of Finance had issued 85 billion yuan in 30-year special treasury bonds and 40 billion yuan in 20-year special treasury bonds. With the continued issuance of this year's one trillion yuan in ultra-long-term special treasury bonds, the implementation of major national construction projects will accelerate and generate tangible work volumes, which will continuously improve social expectations and promote employment absorption.
With the continued implementation and effectiveness of policies aimed at promoting consumption and investment, including large-scale equipment upgrades and trade-in programs for consumer goods, domestic demand is expected to continue its recovery. Consequently, the overall price level is anticipated to sustain a moderate upward trend.