Backing for new types of consumption

The central government has ratcheted up support for new forms of consumption in sectors including healthcare, education, entertainment and tourism as part of broader efforts to promote a rebound in retail sales and shore up economic growth.

The General Office of the State Council unveiled a guideline on Sept 21 that is designed to drive the growth of new types of consumption with new business models and patterns. It highlighted the need to bolster the development of infrastructure and services, along with oversight.

In fostering new business models in various areas, the government will refine its Internet Plus services and public service platforms for e-commerce and enable further integration between online and offline consumption, the office said.

To boost the growth of online education, authorities will encourage the development of online learning models and popularize large-scale online open courses and enable the joint development and sharing of various digital education resources.

The development of online healthcare will be supported by the promotion of services including online diagnosis, the use of electronic prescriptions and online sales of pharmaceuticals, according to the guideline.

It also included measures to spur the growth of online entertainment, with steps to give internet companies incentives to create digital art forms and develop new broadcasting platforms for digital resources.

More smart technologies will be applied to the tourism sector to make services more accessible, and additional policy support will be extended to business models such as food delivery, instant delivery and home-sharing services.

Chinese e-commerce and digital service providers will be encouraged to explore the global market, and the development of international courier services will be sped up. The use of the yuan in international settlement will be explored for trading of items involved in the new consumption models, the guideline said.

"Even though the COVID-19 pandemic has brought about an unexpected shock to economic performance, especially in the retail sector, it has also ushered in unexpected opportunities for new types of consumption and services, including contactless models," Gao Gao, deputy secretary-general of the National Development and Reform Commission, told a news conference on Sept 22.

The new models have pushed forward the expansion of online consumption from daily necessities to healthcare, education, entertainment, tourism and fitness, he said.

An important factor that underpinned the positive economic year-on-year growth in the second quarter — after a year-on-year contraction of 6.8 percent in the first quarter — was the new type of consumer spending, he said.

However, a lack of infrastructure such as cold chains and smart express delivery systems, a talent shortage in small cities and rural areas and deficiencies in laws, regulations and standards could affect the sustained growth of the new business models, he added.

The guideline is intended to spur a recovery in spending, foster new growth drivers and further stimulate consumption and unleash its potential, Gao said.

China's retail sales, which posted their first positive year-on-year growth last month, remained the weakest link as other economic indicators, such as investment and industry, pointed a more robust recovery in August.

Meanwhile, online shopping continued to be a key driver of consumer spending last month, with online sales accounting for 24.6 percent of retail sales — 5.2 percentage points more than in August last year — according to the National Bureau of Statistics.

Tommy Wu, lead economist at Oxford Economics, said the pickup in retail sales momentum in August was encouraging, but it continues to lag, with demand for services remaining especially weak.

He said he expects the recovery in household consumption to continue, and employment to pick up, as the economy moves deeper into the recovery stage.

Peng Wensheng, chief economist with China International Capital Corp, said the growth of the digital economy is key to the further expansion of household consumption because it can offer more channels for residents to increase their income.

"The digital economy has played a significant role in the fight against the pandemic, and it will continue to be an important underpinning to boost consumer demand and enable a sustained economic recovery," he said.