SCIO briefing on China's commerce development in 2015

Guo Weiming：

Thank you, Minister Gao. Now let's open the floor for questions. Please identify the media organization you represent before asking questions. Interpretation is available.

CCTV:

Despite weak investment and exports last year, consumption in China remains strong. During the Spring Festival this year, the national consumer market saw a rise of 11.2 percent, especially due to a surge in the catering and box office. However, Chinese visitors went on buying sprees overseas. How do you view this phenomenon? What do you think about China's consumption situation in 2016? What measures will the Ministry of Commerce take to promote consumption?

Gao Hucheng:

Thank you for your question. In my earlier briefing on the main work of the Ministry of Commerce in 2015, I mentioned the role of consumption in economic growth last year. In 2015, final consumption contributed 66.4 percent to economic growth, becoming its main driving force. There are many reasons. Firstly, as we can see, since the 18th National Congress of the Communist Party of China, the income growth of China's urban and rural residents has been faster than the GDP for three consecutive years and the consumption capacity has been expanding. Secondly, China's social security system has been improving gradually. The health and pension insurance systems have been improved and the social security system has become sounder, encouraging people with extra money to consume. Thirdly, consumption conditions have improved. The supply side has been adapted to the market in recent years. For example, the health, travel and entertainment consumptions have seen such growth. Therefore, the consumption growth in 2015 was a sustainable growth based on that in 2014. Personally, I believe the trend will continue in 2016, which is also a general judgment shared by related authorities.

In 2015, a very important factor to which I would like to draw your attention is public entrepreneurship, innovation and the high rate of employment. By last September, China had achieved the year's goal of creating 11 million new jobs. Jobs mean income, and from that comes consumption. This is the basis for consumption growth. Another phenomenon we have to note is that a medium-and-high-income community is forming in China. Some say the community has 90 million people, and others say the number has exceeded 100 million, where different calculation standards may be employed. Consumption levels vary among cities. A uniform standard for calculation is probably one-sided. But it is undeniable that a medium-and-high-income community is forming. This community has some dissatisfaction with public consumption, however; that is, the medium-and-low-end commodities and services can hardly meet their consumption needs. As far as China's outbound shopping is concerned, our available data show the oversea visits in 2015 reached 120 million and consumption abroad, including travel fees, accommodation and shopping expenses totaled 1.5 trillion yuan (US$229.8 billion), among which at least 700-800 billion yuan (US$ 107.3-122.6 billion) was spent on shopping. A large proportion of the shopping involved the medium-and-high-income community, and moreover, their shopping list has mainly turned to daily consumer goods with high-quality and better cost from the past desire for luxury brands. Therefore, business work is a focal point for playing the role of supply side. That is, how to meet the personalized and differentiated consumption needs of the medium-and-high-income community and their needs for more varieties of safer commodities with better quality in a more comfortable shopping environment.

I'd like to point it out that the focus of our structural reform on the supply-side is to solve problems in regard to goods variety, price, quality, safety, as well as the shopping environment. Take the variety of goods as an example: Our country can provide around 200,000 or 300,000 varieties, but a well-known supermarket in developed countries can provide more than 700,000 varieties. Price is another focus involving the tax burden and high logistics cost that is distinct to China. The logistic cost in China went down slightly due to years of effort, but it is still double that in developed countries. This is what we are going to work on in terms of structural reform on the supply-side.

The big picture is income will increase based on stable employment. In 2015, China's GDP reached 67.7 trillion yuan, nearly US$11 trillion, with per capita GDP hitting US$8,000. In some coastal cities, the per capita GDP already exceeds US$10,000, or US$15,000. As the population of consumers with high-middle income increases, overseas shopping is seeing a surge. We will exert great efforts to develop cross-border electronic commerce and enable people to shop overseas while staying at home. This is also one area we would focus on this year. Thank you.