New consumption should be further encouraged

Editor's note: The total retail sales of consumer goods registered a 1.3 percent year-on-year increase in the first half of the year, according to data released by the National Bureau of Statistics last week. Jia Kang, a researcher at the Chinese Academy of Fiscal Sciences, spoke to National Business Daily to explain the reasons behind the uptick. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

In recent years, the authorities have rolled out a suite of policies to boost consumption. These measures, including trade-in programs for consumer goods, prize invoices and interest subsidies for personal consumption loans, have played a vital role in stabilizing consumer spending. While it takes time for the effect of policies to materialize, these measures have mitigated the downward pressure on consumption and boosted optimism about future consumer spending.

The fluctuation the total retail sales of consumer goods saw in the first half of the year can be attributed to several factors, including consumer expectations that have made people save for precautionary purposes.

Another factor is the mixed performance of macroeconomic indicators. For example, investment and consumption have surged in sectors related to artificial intelligence and the digital economy, but some non-high-tech and non-cutting-edge industries have lagged behind. As a result, China's consumption is undergoing a structural transition.

The shift in the preferences of Chinese consumers in recent years is resulting in a structural divergence in consumption patterns. Service consumption registers robust growth, with people increasingly willing to pay for emotional value. In contrast, when purchasing physical goods, more consumers are focusing on affordability and value.

To further expand and upgrade consumption, it is essential to boost the supply of goods and services and widen the range of products while simultaneously raising household incomes and improving consumer expectations. For instance, yacht trips, once a luxury purchase exclusively for the wealthy, have gradually become a leisure activity for ordinary consumers in recent years. Drawing from the experience of developed economies, there is great potential for expanding the consumption of yacht and cruise trips in China.

In the first half of the year, consumption acted as a stabilizer for China's economy, providing a solid foundation for growth.

Foreign trade also delivered a stellar performance during this period. Projections indicate that this year China's imports and exports will surpass those in previous years and make a larger contribution to the country's economic growth.

As for fixed-asset investment, it's important to adopt a problem-oriented approach. Efforts should be stepped up to scale up effective investment, shift the focus from quantitative expansion to quality improvement, and remove bottlenecks and barriers that hinder investment growth.

To promote investment, the government has released a list of projects to advance major national strategies and enhance security in key sectors. It is also planning on building six key infrastructure networks: water, new-type power grids, computing power, next-generation communications, urban underground pipelines, and logistics.

Through these initiatives, the government is boosting investment in infrastructure. Sustained government spending in this area will facilitate the recovery of investment across all sectors, galvanize private investment, and encourage private capital to participate in infrastructure development. Greater enthusiasm among private investors will in turn generate sustained momentum for economic growth.