Consumption will revive once the virus is controlled

In a recently held meeting, the Communist Party of China Central Committee Political Bureau stressed that consumption should play the role of propelling the economic cycle, which put the importance of consumption to the economy in the spotlight.

Official data show that consumption contributed 65.4 percent of the country's economic growth in 2021. In the first quarter of 2022, domestic consumption grew steadily thanks to the release of new consumption potentials. However, the new wave of the novel coronavirus since March has dealt a heavy blow to consumption, with total social retail dropping 3.5 percent that month. This had much to do with the closing of restaurants and lockdowns of some cities.

To cope with the challenging situation, the government has taken several important measures, of which the first is to help market entities. Both the central government and local governments have cut taxes and lowered fees for small and medium-sized enterprises, so as to help them cope with the difficulties. Currently there are over 150 million market entities nationwide, which provide hundreds of millions of jobs. By helping struggling market entities, the policy means to help people keep their jobs and have money to spend.

Besides tax and fee cuts, financial institutions are also required to adopt lower interest rates and lower their fees for customers, so as to better support the real economy and provide funding support to enterprises that are suffering. Local governments are also required to ensure supplies of basic consumption, boost cultural and tourism consumption, and raise the consumption potential of villages.

It should be noted that the resurgence of the virus will only cast temporary effects upon consumption. Once the virus is under effective control, normal consumption will be resumed. With the effect of the supporting policies, consumption will even be boosted.

With the largest middle-income group in the world, China's consumption will continue to flourish as a driver of longterm growth.