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Thoughts and Policy Suggestions about Accelerating the Development of International Consumption Centers in China

Aug 14,2017

By Wang Qing & Wang Wei

Research Report Vol.19 No.3, 2017

I. Accelerating the Construction of International Consumption Centers is of Great Significance

International consumption center is one of the core functions of cosmopolises, the high ground of the national or global market, and the gathering place of consumption resources, playing a big role in leading and driving consumption. At present, China is in the critical period when its economic and social development is going through structural adjustment and shifting gear. Fostering and building international consumption centers is an important way to further expand and upgrade consumption and realize the new situation of consumption-led development more quickly. It will also give a strong impetus to deepening the supply-side structural reform, improving the quality of urbanization and fostering new advantages in global competition.

1. Leading the new normal needs the formation of new drives based on international consumption center

International experience shows that when developed countries in Europe and America reached mid-income level and the middle and late stage of industrialization and urbanization, they formed international consumption centers in such cosmopolises as New York and Paris. These centers not only became world-leading consumer markets, but also strongly led and boosted theconsumption in surrounding cities, in their own country and even around the world by continuously gathering global consumption resources and making consumption innovations, and energetically promoted consumption-driven economic growth. In 2015, the consumption growth in China exceeded investment growth for the first time in the 21st century and contributed 60.9% to economic growth. At the moment, China is at a critical period of forming the new situation of consumption-led development, and urgently needs to foster international consumption centers with powerful innovation and gathering capability, so as to assist in the consumption upgrade of urban and rural residents, further enhance the consumption market, and provide new drives for the healthy economic development in the new period.

2. Deepening the supply-side structural reform needs international consumption center as new focus

The consumption of Chinese urban and rural residents is in the critical stage of evolving from zero to low level and then to high level and from commodities to services. New demand for goods keeps emerging, and service consumption takes an ever larger proportion, which urgently calls for the improvement of the capability and level of goods and service supply. Accelerating the construction of international consumption center can not only expand the scale of emerging consumer markets more quickly, but also effectively gather various consumption resources and promote consumption innovation. It will provide clearer market signals for accomplishing the supply-side structural reform, guide market entities to accelerate the innovation in products, services and business models, and urge the government to move faster in the reform and innovation of the market regulation and governance system and the law-based business environment.

3. Participating in global competition needs international consumption centers as new carriers

With the deepening of economic globalization, the integration of global consumer market is becoming the new trend, and international consumption center has become the new carrier for countries in the world to participate in global market competition, gather consumption resources from around the world and attract global consumers. China is not only a large producer of consumer goods, but also the largest consumer market in the world with the greatest potential, and the main battlefield of global market competition. Accelerating the construction of international consumption centers is good for attracting quality goods and services from around the world and fostering new international consuming places for Chinese and global consumers. Those centers will also become the window to showcase Chinese brands and culture and the channel for them to enter the global market, giving strong support for China to participate in the global market competition and occupy the high ground there.

4. Accelerating the construction of cosmopolis and improving the quality of new-type modernization needs international consumption centers as a breach point

China has come to the middle stage of urbanization, when the boosting effect of urbanization on consumption becomes more pronounced (Figure 1). The Yangtze River Delta, Pearl River Delta and large city clusters along the eastern coast like the Beijing-Tianjin-Hebei region make up over 40% of the national consumer market. While city clusters are developing at a faster pace, it is urgent to accelerate the construction of international consumption centers with central cities like Shanghai, Beijing, Guangzhou and Shenzhen as the basis, serving the economy as the orientation, upgrading consumption as the guideline and institutional innovation as the support. In this process, we should foster new urban consumption functions, further enhance the influence and radiating effect of central cities in the region, in the country and around the world, and better promote the coordinated development among different cities.

II. Foundation and Conditions are in place for Building International Consumption Centers in China

The consumer market in China has developed continuously and rapidly, and a group of large consumer cities with world-leading consuming scale and initial capability of consumption attraction and innovation leadership have emerged, which have the greatest potential to become international consumption centers.

First, the scale of consumer market is among the top in the world and the effect of consumption-driven growth is emerging. In 2015, Chinese cities including Shanghai, Beijing, Guangzhou and Shenzhen were among the 50 largest consumer cities in the world. Among them, the total retail of consumer goods in Shanghai and Beijing was more than RMB1 trillion each, putting them among the top ten consumer cities in the world. Final consumption expenditure accounted for 59.1% and 63% of their GDP respectively (consumption rate), 7.5 and 11 percentage points higher than the national average, and consumption contributed to about 70% of their economic growth.

Second, high-end consumption resources are gathered more quickly. According to the “global cross-border retail attraction index”, Shanghai and Beijing are now two of the ten most consumer-attractive cities in the world and among the most favored by international brands and luxury goods (Table 1). In recent years, famous consumer brands at home and abroad and corporate headquarters all move to large consumer cities at a faster pace, giving rise to a group of world-renowned CBDs. For example, the Nanjing West Road in Shanghai is home to 22 regional headquarters of multinational companies and nearly 1,600 domestic and foreign brands, including more than 1,000 world-renowned ones, attracting a large amount of medium- and high-end domestic consumers and international tourists. In 2015, Shanghai and Shenzhen received a total of more than 15 million inbound tourists, accounting for 12% of the national total, and foreign exchange income from inbound tourism accounted for more than 20% in the country.


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