China continues to express confidence that its domestic consumer goods market will soon surpass the United States to become the world’s largest.
In the past, Chinese authorities have rarely made such comparisons for fear of triggering fierce retaliation and an escalation of efforts at containment from Washington.
However, Lian Weiliang, deputy chairman of China’s top economic planning agency has reinforced the vision as part of the country’s self-reliance strategy, which will be implemented in the 2021 - 25 development plan and 2035 vision.
“China’s retail sales for the first time surpassed 40 trillion yuan in 2019, an increase of more than 42 per cent from 2015. It will overtake the United States to become the top consumer goods market very soon,” Lian told the China Reform Forum at the weekend, according to the official Xinhua News Agency.
“We must well take advantage of our super-large market, trying to build a high-quality market system in five years.”
Retail sales in China reached 41.2 trillion yuan (S$8 trillion) last year, according to the National Bureau of Statistics, which puts it around US$200 billion (S$268 billion) shy of consumer spending in the American market in 2019, said Wang Yiming, the former deputy director of the Development Researcher Centre of the State Council.
According to the US census bureau, American retail sales totalled US$6.2 trillion in 2019.
Lian painted a rosy picture of the world’s second largest economy, which already has the world’s biggest middle-income population, produces the world’s largest manufacturing added value, has the most internet users as well as top 500 enterprises.
The National Development and Reform Commission is responsible for drafting the five-year plan, with the details of dozens of compulsory and anticipatory steps expected to be unveiled in March at the National People’s Congress.
Chinese authorities have long pinned their hopes on the ability of the nation’s large domestic market to continue to attract foreign investors and so offset US containment and decoupling efforts, as policymakers seek to find new growth drivers by focusing on the domestic market and home-grown technologies.
China’s recently announced goal of doubling its national gross domestic product by 2035 already implies that it will surpass the US within the next 15 years, although the official document published last month does not offer a specific comparison.
The Chinese economy expanded by 4.9 per cent in the third quarter of 2020, accelerating from a rise of 3.2 per cent in the second quarter and a fall of 6.8 per cent in the first quarter.
Retail sales, meanwhile, grew 4.3 per cent in October, compared to a fall of 20.5 per cent in combined figures for January and February.
The International Monetary Fund expects China’s economy to grow 1.9 per cent this year, while the US economy will shrink by 4.3 per cent, according to its latest projections.
Wang, the former deputy director of the Development Researcher Centre of the State Council, said China’s consumer market was likely to overtake the US this year, but warned that domestic consumption is still being restricted by the coronavirus, high household debt and a widening income gap.
The coronavirus hit low-income groups and small business owners harder than middle and high-income families, while rising household debt, largely stemming from property investment, has reduced their consumption capability, he warned.
Han Yongwen, deputy director general of the China Centre for International Economic Exchanges, said the government should concentrate on expanding the middle-income population over the next five years, trying to lift its proportion to around 40 per cent of the population, or 600 million people, from the current level of 29 per cent.
“If it can be done, there would be a huge boost to China’s consumption and potential economic growth,” he said.
This article was first published in South China Morning Post.