Retail moves seen boosting economy

China's moves to accelerate innovation in the retail sector are expected to create new sources of consumer demand, inject fresh momentum into the industry and strengthen consumption-driven growth, government officials said on Thursday.

The country issued a guideline setting the goal of establishing a modern retail system and fostering a number of globally competitive retailers by 2030.

Jointly released by the Ministry of Commerce, the National Development and Reform Commission and other government departments, the document outlines measures to improve retail planning, encourage new retail offerings, foster new consumer demand, and accelerate the sector's innovative and high-quality development.

Speaking at a news conference in Beijing, Li Jialu, director-general of the department of circulation industry development at the Ministry of Commerce, said China's retail sector has entered a critical stage of transformation, facing challenges including an inefficient retail layout, supply-demand mismatches, rising operating costs and imbalances between online and offline retailing.

Li said the new guideline is intended to help retailers adapt to changing consumer demand through better supply-chain management, digital transformation and new business models, while supporting the sector's long-term, sustainable growth.

Zuo Xiaobo, deputy director-general of the department of trade in services and commercial services at the Ministry of Commerce, said the government will accelerate the rollout of retail innovation projects in 50 pilot cities, supported by an initial 8.6 billion yuan ($1.27 billion) in funding, to boost consumption.

Priority will be given to first-store launches and new consumption scenarios integrating retail, tourism, culture and entertainment to stimulate spending, Zuo said.

Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said the rapid emergence of new retail formats reflects the interplay between shifting consumer demand and technological advances.

"As consumption scenarios become increasingly diverse, consumer demand is moving away from standardized, mass-market products toward more segmented and differentiated preferences," said Zhou, adding that retailers therefore need more targeted strategies to reach consumers and tailor their offerings to different usage scenarios.

The policy also comes as China's consumer market shows signs of improvement. Data from the National Bureau of Statistics on Thursday showed that China's consumer inflation remained mild in June, pointing to continued resilience in the consumer market.

The country's consumer price index — a main barometer of inflation — rose 1.0 percent year-on-year in June, while the core CPI, which excludes food and energy prices and is deemed a better gauge of supply-demand conditions, also increased 1.0 percent.

Lynn Song, chief economist for China at Dutch bank ING, said that although global energy price fluctuations could affect the pace of reflation, "a backdrop of modest positive inflation is likely to remain the dominant theme".

Meanwhile, in the first half, the CPI rose 1.0 percent from a year earlier, while core inflation increased 1.2 percent, the NBS said.

Wen Bin, chief economist at China Minsheng Bank, said the country's price environment has moved out of its previous trough and entered a phase of moderate inflation this year.

"Headline inflation remains relatively low, but core inflation has hovered around or above 1 percent, while services prices have maintained steady growth," Wen said, adding that the trend points to a healthier price structure.

He expects the GDP deflator to rebound to around 2 percent in the second quarter, which would end a 12-quarter run in negative territory.