New retail to be a driver for the upgrading of economic growth

In the Government Work Report he delivered to the National People's Congress, China's top legislature, on Monday, Premier Li Keqiang stressed consumption's fundamental role in driving economic growth, and urged governments of various levels to promote the development of a new type of consumption featuring "new retail". Southern Metropolis Daily comments:

Before 2010, the consumption growth in China had been markedly slower than the growth of either investment or gross domestic product. Consumption's share in GDP had dropped from more than 70 percent in the 1960s to 48 percent in 2010. In the developed countries, the proportion is nearly 70 percent, and consumption is a robust economic engine.

The fall of the consumption's share in GDP in recent years primarily stems from the Chinese manufacturing industries' inability to satisfy the demand for higher quality products of consumers, who have demonstrated their strong purchasing power abroad.

Last year, Chinese tourists spent about 1.5 trillion yuan ($237 billion) overseas, up from 1 trillion yuan in 2014.

The purpose of the supply-side structural reform the central authorities are advancing is to upgrade the supply side to better satisfy the needs of the demand side, and boost economic growth by tapping into the potential of consumption. It represents the right direction to restructure the economy.

Over the past five years, the total retail sales of consumer goods has increased by 11.3 percent on average each year with online purchases growing more than 30 percent annually on average. The effects of the fast rise of e-commerce are palpable.

Online retail expands the trade radius and resolves the information asymmetry while forming a whole industry chain and creating a large number of jobs, making it a growth driver for various industries based on the internet and modern logistics and new financial technology.

That the Government Work Report has emphasized the importance of developing new types of consumption, shows that the authorities intend to make it a driver for upgrading the quality of economic growth.