E-commerce adoption in China: Fostering job creation and inclusive growth

Data from China's National Bureau of Statistics (NBS) released on January 17, 2023 show that a total of 12.06 million new urban jobs were created in 2022, exceeding the annual target of 11 million. China experienced steady progress in job creation despite the COVID-19 outbreak and resulting mobility restrictions which disrupted global supply chains – compelling enterprises around the world to lower wages, minimize staff hours and in some cases lay off workers, as firms seek to reduce cost – creating one of the worst job crises since the Great Depression.

However, during this difficult period, when countries worldwide are grappling with the crisis, which has pushed millions of people into poverty and widened inequalities, China on the other hand, has made substantial gains in job creation – making vital contribution to rural revitalization, supporting growth across urban industries and significantly increasing inclusive growth – an outstanding social and economic gain, which presents key lessons to the rest of the world.

China has achieved substantial gains in job creation and inclusive growth by sticking to a well-implemented people-centered approach (with clearly defined goals) in the fight against COVID-19, which prioritizes lives and livelihood, leveraging digital technologies, specifically e-commerce to mitigate the spread of coronavirus by reducing face-to-face interactions and concurrently, promoting economic activity – enabling firms, including micro-, small- and medium-sized enterprises (MSMEs), to access new and large markets at comparatively lower cost. Ultimately, China's approach to strengthen e-commerce adoption across urban and rural communities in the fight against COVID-19 yielded encouraging results.

Data from the NBS reveal that in 2022 China's online retail sales increased 4 percent year-on-year to 13.8 trillion yuan (about $2 trillion) – to add more, in China, the world's largest online retail market, online retail sales of physical goods in 2022 was up by 6.2 percent compared to 2021 – creating opportunities for diversification and new markets for entrepreneurs, innovators and MSMEs in both urban and rural areas – enabling these participants to overcome market barriers, create jobs directly and also via logistics services and other segments of the e-commerce ecosystem to meet the rising market demand. E-commerce expansion in China has rapidly integrated economic activity across urban and rural communities, providing increased access to new and larger markets.

In the agriculture space, a key sector of the Chinese economy, widespread usage of e-commerce increasingly facilitates the two-way circulation of rural and urban commodities at a lower cost – creating new jobs which are accessible to all, including vulnerable groups such as women and youth. According to the Ministry of Agriculture and Rural Affairs, in 2022 China's online retail sales of farm produce increased by about 10 percent over 2021, resulting from the rapid adoption of e-commerce in the agriculture sector.

For example, Qingjian, a county on the Loess Plateau in northwest China, which has grown jujube trees for over 3,000 years, is benefiting enormously from the booming agriculture e-commerce. For a long time, the jujube industry, a pillar of the local economy, has suffered headwinds mainly attributed to intensified competition, which caused profits to plummet. During this period, jujubes were sold at low prices as primary commodities on wholesale markets, reducing income of farmers and making the jujube industry unappealing – a change that impeded rural revitalization.

However, in recent times, booming e-commerce in Qingjian is a game changer. Farmers, MSMEs and entrepreneurs in the county are selling jujubes and fruit preserves across the length and breadth of China through e-commerce, overcoming market barriers and gaining increased access to new and larger markets – creating new jobs and fostering rural revitalization – a growing trend across China.

Characterized by the exponential rise in live streaming, a newfangled feature of e-commerce which gained popularity in the country since the COVID-19 outbreak, this additional resource makes markets more accessible for both urban and rural businesses. Live streaming e-commerce enables sellers and buyers in any part of the country to communicate effectively, almost as if the transaction is taking place in the physical shop, further boosting business in the country amid the COVID-19 pandemic.

According to a report from the Academy of China Council for the Promotion of International Trade, users of live streaming e-commerce platforms in China reached 469 million by June 2022, an upsurge of 204 million from March 2020, accounting for 44.6 percent of internet users in the country – enabling entrepreneurs, farmers and MSMEs to directly engage customers nationwide.

Between May 2021 and April 2022, China's leading short-video platform Douyin (Chinese version of TikTok) launched more than 9 million live streams every month, selling 10 billion pieces of goods with total sales growth of 2.2 times year-on-year. Similarly, by March 2022 the total number of live stream views on Taobao, China's largest online marketplace, was more than 50 billion, further accelerating job creation and spurring inclusive growth, especially for rural communities.

Despite these remarkable socio-economic gains, China's e-commerce is yet to reach its full potential. To unlock it, policymakers and relevant organizations should direct additional efforts towards tackling cybercrime, scaling up investments in infrastructure, logistics, training and skills development. Collectively, these efforts will create a more conducive environment for all groups to actively engage in e-commerce without leaving any one behind.