Wang Wei

Since 2001, the development of China’s consumer goods market has been on a steady growing trend, and growing consumer demand has become an important base for the steady and fast development of the national economy. In 2002, the consumer goods market will continue to maintain the steady and growing development trend.

I. Basic Features of the Consumer Goods Market in 2001

(I). The consumer goods market developed steadily.

In 2001, total retail sales of consumer goods reached 3759.52 billion yuan, an increase of 10.1% over the previous year, and the growth rate was 0.4 percentage point higher than the one of last year. In terms of the growth trend, all months, excluding the first quarter in which the growth rate fluctuated, maintained a high growth rate ranging from 9.6% to 11% (as shown in Chart 1). In the second, third and fourth quarter, the growth rate registered at 10.3%, 9.8% and 10.0% respectively, 0.5, 0.4 and 0.8 percentage point higher respectively over the same period of the previous year.

It is worth noticing that the growth rate of consumer goods retail sales, against the background of a low retail price level, has exceeded GDP growth for the second consecutive year. In 2001, the growth rate of the total retail sales of consumer goods was 2.8 percentage points higher than the GDP growth rate, a 1.1 percentage points growth over the previous year. According to estimates by the State Information Center, the contribution rate of the domestic consumption demands to the GDP growth was 51% in 2001. This indicated that the economic policy in recent years, featuring the stimulation of domestic demands, had paid off, and the steady and fast growth of the consumer goods market has become an important factor supporting the Chinese economic growth.

(II). The pattern of low price level of consumer goods was maintained.

In 2001, the overall Consumer Price Indices (CPI) registered a meager 0.7% rise, slightly higher than 0.4% in the previous year. The overall retail price indices dropped by 0.8%, and the tumble margin was reduced by 0.7 percentage point as compared with the previous year. The main features of the price situation in 2001 are as follows:

First, the price level rose and then dropped. In terms of monthly CPI, it rose slowly from January to May, and the price level rose by 1.7% in May over the same month of the previous year. The price level from January to May rose by 1.1% over the same period of the previous year. From June, the price level started to turn down. The price level in September, November and December dropped, and in December, the price level dropped by 0.3% over the same month of the previous year.

Second, the CPI by category of commodities presented big difference. Of the eight kinds of consumer goods, the price level of food, medical and healthcare and daily necessities remained basically unchanged, the price level of housing, and recreation, culture, education and service items rose by 1.2% and 6.6% respectively over the same period of the previous year.1 This was the main factor contributing to the rise of the overall price level. The price level of cigarette and wine, clothing, household appliances and service, transportation and telecommunications dropped by different margins. Of them, the price of clothing, household appliances and service dropped by 1.9% and 2.3% respectively over the same period of the previous year, registering a relatively big margin of decline.

Third, the price level in different regions was unbalanced, and more regions registered price rise. In 2001, the CPI of 18 provinces, autonomous regions and municipalities registered a rising trend. In 2000, 42% of the provinces, autonomous regions and municipalities registered a rising price trend, but the percentage rose to 68% in 2001. In addition, the CPI of rural residents for the first time reversed the decline trend for three consecutive years and began to rise, the yearly price level rose by 0.8% over the previous year (0.1% in 2000). The rising rate exceeded the price level of urban consumption by 0.1 percentage point.

Data source: Chinese Economic Performance Monthly, Vol. 1-12, 2001, the National Bureau of Statistics

(III). The adjustment of supply-demand structure of consumer goods sped up.

In 2001, the consumer goods market was still a buyer’s market, meaning the supply was bigger than the demand, but the adjustment of supply-demand structure began to speed up. According to the survey of supply-demand situation of 600 major commodities conducted by China Commercial Information Center, the percentage of commodities with over supply in the first and second half of the year was 87.2% and 82.9% respectively, dropping by 4.3 percentage points in the second half. The percentage of commodities with a balanced supply and demand increased, reaching 17.1% in the second half or 4.3 percentage points higher than the first half. In 2001, there was no commodity in short supply.

(IV). The structural disparity of the consumer goods market became increasingly remarkable.

First, the development gap between the rural and urban market further widened. In 2001, the urban consumer goods market basically maintained a high growth rate, the annual retail sales stood at 2.35434 trillion yuan, registering an increase of 11.5% over the same period, and the growth rate was 0.9 percentage points higher than the previous year. The consumer goods market at or below the county level fared smoothly, but the growth rate was relatively low, the rural market development below the county level, in particular, has been hovering around 7-8%. The yearly retail sales of rural consumer goods market at or below the county level stood at 1.40518 trillion yuan, registering a growth of 7.7% over the same period, and the growth rate was 1 percentage point lower than the previous year (see Chart 2). Therefore, the gap between the urban and rural consumer goods market reached 4.2 percentage points, widening by 1.9 percentage points compared with the previous year. ...

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May 2002