Archive for ‘consumption’

08/03/2019

China Focus: China to ramp up efforts to provide better elderly care

BEIJING, March 7 (Xinhua) — As China is faced with a growing aging population, the government has pledged to provide better elderly care services and facilities for the silver-haired, and give a strong boost to domestic demand.

Elderly care remains high on the agenda in this year’s government work report, which said that significant steps would be taken to develop elderly care, especially community elderly care services.

The number of people in China aged 60 and above reached 250 million by the end of 2018, accounting for 17.9 percent of the country’s population.

“Growing demand will trigger greater market potential in China’s senior care industry,” said Tang Wenxiang, founder of Fullcheer Group, a major elderly care services provider based in Changsha, capital of central China’s Hunan Province.

Fullcheer Group has 50 branches in more than 10 provinces and cities with a total of 5,000 beds. Tang expects the number of his company’s beds to increase to 50,000 in five years.

“There is still a huge gap between the demand of China’s aging population and the number of elder care facilities,” Tang said.

The country will provide support to institutions offering services in the community like day care, rehabilitation care, and assisted meal services and outdoor fitness services using measures such as tax and fee cuts and exemptions, funding support, and lower charges for water, electricity, gas and heating, according to the government work report.

Tang said government’s measures to develop elderly care services greatly boosted the confidence of entrepreneurs who run businesses in the sector.

Developing the elderly care industry is good for improving people’s well-being and stimulating consumption, said Xu Hongcai, an economist with the China Center for International Economic Exchanges.

“Consumption on elderly care requires the supply of the elder care market, offered by both the government and the market,” he said.

A research report issued by Guolian Securities suggests that a string of policies have been carried out in China to encourage the participation of the social sector in the senior care industry, which will boost the country’s consumption in the health and medical sectors.

As China opens this sector, foreign firms such as France’s Orpea and Japan’s Nichii have tapped the elderly service market in China.

China still lacks leading players in the senior care market which includes nursing care, rehabilitation assistive devices and daily necessities for seniors, Tang said.

The long-term care insurance system will help increase the occupancy rate of some elderly services facilities given a number of elderly people can hardly afford the expenses, according to Tang.

Source: Xinhua

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09/02/2019

China’s information consumption surges in 2018

BEIJING, Feb. 9 (Xinhua) — China’s information consumption saw a rapid increase last year, according to the Ministry of Industry and Information Technology (MIIT).

Total business volume of the telecommunication sector rose by 137.9 percent from the previous year, the MIIT has said.

Services of 4G continued to develop last year, with the number of users reaching 1.17 billion.

The average household usage of mobile traffic reached 6.25GB per month in December 2018, more than double the amount in the same period in the previous year, the ministry said.

The ministry attributed the soaring information consumption to Chinese telecommunications operators’ measures of increasing Internet connection speed and cutting connection costs.

Wen Ku, director of the telecom department at the MIIT, said the ministry would make continued efforts to expand Internet coverage, improve service quality and release the potential of the digital economy.

Source: Xinhua

14/12/2018

Lowest retail sales growth for 15 years dash China’s hopes that consumption will offset trade war

Beijing had high hopes that tax cuts for individuals would lift consumer spending and boost an economy which is showing the effects of the trade war, but overall retail sales in November proved disappointing.

Even record spend on Singles’ Day’ on November 11 could not prevent retail sales from posting their weakest growth rate in 15 years.

November’s retail sales, which covers both corporate and consumer spending, stood at 3.52 trillion yuan, down from 3.55 trillion yuan in October, according to data released by the National Bureau of Statistics on Friday.

The growth rate fell to 8.1 per cent compared to November 2017, below the 8.6 per cent rate in October. The figure was also below the 8.8 per cent growth forecast by a Bloomberg poll of economists. Adjusted for inflation, the growth was even lower, at 5.8 per cent.

As the US-China trade war continues to weigh on exports, Beijing is counting on households and companies to spend more to stabilise growth.

However, weak consumption underscores the difficulties the Chinese leadership is having in its efforts to keep the economy stable.

The government expected that its October move to raising the threshold for taxable personal income to 5,000 yuan per month would release unlock spending power equivalent to hundreds of billions of yuan.

It appears likely that some consumers saved their extra income for the November 11 shopping festival, when they can benefit from large discounts.

Shen Li, a physical therapist from Beijing, said his monthly after-tax income increased by 1,000 yuan due to the tax cut, which he used to purchase items such as household appliances on Singles’ Day.

Singles’ Day, China’s version of the US’ Black Friday, is often seen as a gauge of Chinese consumers’ spending power, but in the past it has not been able to drive up total retail sales figures.

This year’s Singles’ Day sales across Alibaba’s e-commerce platforms totalled US$30.8 billion, dwarfing the online sale numbers for Black Friday and Cyber Monday combined. But the growth rate of total transactions fell to 27 per cent, from last year’s 39 per cent.

The late October launch of Apple’s new iPhone XR, which is cheaper than the earlier iPhone XS series, did not boost telecom sales in China, which dropped 5.9 per cent in November year on year, to 48.5 billion yuan.

However, a plunge in car sales was the main culprit for weak consumption. Auto sales were down 10 per cent on a year earlier, to 345.9 billion yuan, according to the statistics bureau figures, as auto dealers struggled to clear their inventories.

This matched industry surveys from the China Passenger Car Association (CPCA), which reported this week that retail sales of sedans, multi-purpose vehicles and sport utility vehicles plunged 18 per cent to 2.05 million units last month, which makes a full-year decline very likely in the world’s largest auto markets.

Ding Shuang, chief China economist from Standard Chartered Bank, said weak auto sales were caused by the expiration of tax rebates for smaller cars, a slowdown in consumer loans partly due to the crackdown in online peer-to-peer lending platforms, and subdued property investment, since new homes are often sold together with garages.

Local commentators worried about ‘downgrading’ of consumption in 2018 as spending on premium goods slowed.

The growth of real estate investment from January to November remained stable at the 9.7 per cent rate seen in the January to October period.

“The decline of consumers’ abilities and willingness to spend is going to first cut down on big ticket items like cars,” said Jiang Chao, chief economist from Haitong Securities. “Auto accounts for two-thirds of China’s consumption of consumer durables.”

Rising household debt has given Chinese policymakers few options to boost spending other than cutting taxes. China’s household debt-to-GDP rose to 49.3 per cent in the first quarter, which was lower than in advanced economies but higher than the average 40 per cent among emerging economies, according to the Bank of International Settlements.

“Household debt will continue to rise and so debt service costs will remain a drag on consumption. But the debt service burden on households should not get much worse unless there is a big acceleration in credit growth (which we do not expect),” Ernan Cui, an analyst from research firm Gavekal Dragonomics, wrote in a report.

“Local commentators worried about ‘downgrading’ of consumption in 2018 as spending on premium goods slowed,” Cui said. “The biggest boom in products favoured by affluent households is probably over, but consumption upgrading will continue as long as income growth does.”

NBS spokesman Mao Shengyong said at a press conference on Friday that China still had the potential to maintain a stable and fast rate of consumption growth next year, given the rise in the number of middle class citizens.

Economists are eyeing new individual tax deductions that will go into effect next year and more tax relief for private companies to prevent the economy from slowing further.

A more complex tax deduction policy which takes in six types of expenses – from elderly care to medical costs- could inject an additional 80 billion yuan in consumers spend, according to Cui’s estimate.

Beijing has also indicated that it will tighten the collection of social insurance contributions that employers are required to pay, but analysts fear that this could negate the benefits of the tax deductions for employees.

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