[Contemporary Business News] Consumer Economy: The Driving Force of Domestic Demand in the Rise of Great Powers
2019-01-30
Interlocutor: Liu Siwei
First-class Honorary Professor of Hunan University of Commerce, Ph.D. Supervisor, Director of Academic Committee of Hunan University of Commerce, Chief Expert of Hunan Mobile E-Commerce Collaborative Innovation Center, Dean of Economics and Trade Development Research School of Hunan University of Commerce, the Counselor of Hunan Provincial People's Government , the State Council Special Allowance Specialist, Judge of National Philosophy and Social Science Planning and Applied Economy Discipline Team. Vice President of Consumer Economics Association, Consultant and Director of Academic Committee of National Institute of Higher Education in Trade and Economy, Deputy Director of Expert Committee of China Commercial Economics Association, Member of G30 Forum of China Circulation, Honorary President of Hunan Market Association, Honorary President of Hunan Commercial Economics Association.
▲Professor Liu Siwei (second from the left) won the prize at the provincial conference
on tackling key problems and offering suggestions for the reform.
Consumption is the ultimate demand. It is not only the ultimate goal and motive force of production, but also the direct embodiment of people's need for a better life. Speeding up the improvement of the system and mechanism for promoting consumption and enhancing the basic role of consumption in economic development are conducive to optimizing the major proportion of national economy such as production and consumption, building an economic development mode in line with China's long-term strategic interests and promoting stable and healthy economic development. What are the characteristics of China's consumer economy in the past 2018? In the new year, what will be the momentum of China's consumer economy? As citizens, how can we grasp the current situation and better enjoy the great economic era brought about by the reform and opening up? On the afternoon of January 23, our reporter interviewed Professor Liu Siwei, a famous Chinese economist and doctoral supervisor of Hunan University of Commerce, on the topic of consumer economy.
The warm winter sun after a long rain is precious. In the afternoon, in Professor Liu Siwei's office, the second office building of Hunan University of Commerce, west part of Changsha, a dialogue opened up a magical world and a conversation warmed a winter afternoon.
2018
A new consumer revolution
Reporter: Professor Liu, please talk about the relationship and basic situation between China's economy and consumption in 2018.
Liu Siwei: Ok. 2018 is the fortieth year of China's economic reform and opening up. China's economy has undergone new changes and consumption has reached a new stage. China in both the scale and growth rate of consumption has become a real consuming country in the world.
Reporter: Could you please tell me some specific data?
Liu Siwei: China's GDP exceeded RMB90 trillion in 2018, reaching 90.0309 trillion, ranking second in the world, and getting closer and nearer to the United States. Consumption exceeded 36 trillion. What is the concept of GDP per capita approaching US$10000 last year? By World Bank standards, we have entered the ranks of upper middle-income countries. If the average person reaches more than $12000, then it is a high-income country.
Reporter: Professor Liu, our country GDP is at a high-speed growth, then what is the situation of consumption?
Liu Siwei: From the above figures, we can see that our country's per capita income is getting closer and closer to the high-income countries. Last year, GDP grew 6.6 percent and retail sales of consumer goods grew more than 6.6 percent, this is the first feature of last year's consumer economy.
▲Some Economic Works and Publications Edited and Co-written by Professor Liu Siwei
Reporter: So, what is the second characteristic of the development of consumer economy last year?
Liu Siwei: In 2018, more attention should be paid to the counter-effect of consumption on production, so the contribution rate of consumption to economic growth has entered a new stage.
Reporter: Could you please tell me the details of this new phase?
Liu Siwei: Ok! Growth in consumption rose from less than 50 percent in the past decade to 76.2 percent last year, an all-time high of 18.6 percent over 2017, a remarkable achievement. China as an economic power, consumption as the leading force of domestic demand is gradually reflected.
Reporter: Just now you mentioned that we are playing the role of consumption on economic growth, please talk about the changes in this area.
Liu Siwei: In the past, the driving force of economic growth was mainly export, investment, but now it has shifted to consumption function, and consumption has become the leading force of domestic demand.
Reporter: Professor Liu, what specific policies and mechanisms do the country have in this regard?
Liu Siwei: This is the third feature I want to talk about. The CPC Central Committee and the State Council attach importance in promoting the release of consumption potential in terms of policy guidance and mechanism improvement. This is an important feature of last year's consumption development. The report of the 19th CPC National Congress proposed that consumption plays a fundamental role in economic growth, and that last year it paid more attention to policy landing.
Reporter: Professor Liu, apart from what was mentioned in the report of the 19th CPC National Congress, does the central government have any specific policies and documents?
Liu Siwei: Yes. Last year, there was an important sign that for the first time in the name of the CPC Central Committee and the State Council, jointly issued a number of opinions on improving the system and mechanism for promoting consumption to further stimulate the consumption potential of residents, which is unprecedented in history. The document was released in October last year. After the document came out, the General Office of the State Council issued the implementation Plan for improving the system and Mechanism of promoting consumption (2018-2020).
Reporter: Professor Liu, what is the core of this opinion issued by the CPC Central Committee and the State Council?
Liu Siwei: This opinion and plan keeps abreast of the new situation of China's current economic and social development. In order to solve the obstacles of the system and mechanism that restrict the expansion and upgrading of consumption, it puts forward a series of policies and measures, which are to expand and guide the consumption of residents at the present stage. The programmatic literature to promote the steady and healthy development of the economy is also a guiding document for the study of current consumer economic problems. “Several Opinions On Perfecting the System And Mechanism of Promoting Consumption to Further Stimulate the Consumption Potential of Residents”, in line with the purpose of meeting the needs of the people for a better life, clearly put forward the “Implementation of Policies to Encourage and Guide Residents' Consumption,” and from the point of consumption in kind, Service consumption, new consumption patterns, rural consumption, as well as the consumption environment, policy matching and consumption guidance, and other aspects, have made clear arrangements to further release and expand consumption demand at present. For promoting the upgrading of consumption structure, it has put forward a series of targeted and feasible guidance and countermeasures.
Reporter: Professor Liu, what is the guiding significance of this document to our consumer economy?
Liu Siwei: This is a very important feature of last year's consumer economy. In the past, it used to be in the name of the General Office of the State Council or central ministries and commissions, but last year the CPC Central Committee and the State Council jointly issued a paper enough to show that Xi Jinping is the core of the CPC Central Committee's special emphasis on the consumer economy.
Reporter: Please talk about the characteristics of people's consumption in 2018.
Liu Siwei: This is exactly the fourth characteristic of last year's consumer economy. With the improvement of people's income level, it is more obvious that China's consumption lifted into the era of quality consumption in 2018.
Reporter: Professor Liu, what are the specific manifestations of consumption upgrading?
Liu Siwei: Consumption upgrading is manifested in two aspects. First, the consumption of material products are focused on quality and brand, and the other is to pay more attention to culture and service consumption. Service consumption has grown especially fast since last year.
Reporter: Would you like to talk about the main consumption of services?
Liu Siwei: The first thing to be affected is tourism consumption. Followed by cultural consumption, sports consumption, health consumption, information consumption. Information consumption, including education, develops rapidly.
Interviewer: Could you give our readers a few examples?
Liu Siwei: Ok. For example, cultural and educational consumption, if you go to a slightly better neighborhood or a property near the school, you can see a lot of early childhood training courses or training schools, which are not cheap, and education and training of children have become an important part of consumption. This belongs to educational consumption. There is also tourism, now our country has become the world's largest tourist country, and Chinese tourists have become the source of competition for all countries. In recent years, rural tourism has become more and more prosperous. In the big festivals and even weekends, the family has gone to the countryside for leisure, experience, eating and fishing. It has become the first choice of many people.
Reporter: How do you think about consumption upgrades?
Liu Siwei: We have entered the era of consumption upgrading, which is the inevitable result of social development and a good thing. Some experts even called it a “new consumer revolution.” Last year, the theme of China Consumers Association’s rights protection was “quality consumption”.
Reporter: You just said that quality upgrade is the fourth major feature of economic consumption in 2018. So, is there any other characteristic of economic consumption last year?
Liu thinking: Yes. The fifth is that new business models such as new economy, new business, and new retail, which promote consumption, are emerging one after another, and the development is rapid and dazzling. For example, mobile e-commerce, smart business, smart stores, smart logistics, etc., various take-outs in the catering industry, Internet +. In Changsha, small restaurants have a entity store plus online sales, “express small brothers” running across the street, people can consume only by scanning code. There are also various online shopping. Double eleven, sales in 2017 was only more than RMB160 billion, and last year increased to more than RMB240 billion. In October last year, I went back to my hometown to attend the wedding of my relatives and friends. I watched the middle-aged and old women sing in the valley and sang in the valley. They didn’t know the music but they were courageous. Although sang out of tune, they enjoyed themselves, this phenomenon I have never seen before. It is also the pursuit and demand of the people for a better life.
Reporter: Professor Liu, In terms of consumption, what impact does the Chinese consumer economy have on the international market?
Liu Siwei: Last year, the degree of internationalization of consumption and the degree of openness further improved. I don’t know if you noticed this biggest sign. China hosted the first import expo, and a large number of consumer goods increased imports. The other is that cross-border e-commerce procurement has developed quite fast; the third is to greatly reduce import tariffs, many products have reduced tariffs, such as zero tariffs on fruit imports from countries in Southeast Asia, a large number of drug import taxes, and some even zero tariffs. Especially for cancer treatment drugs, because of the tax reduction, the price has dropped drastically, and the people have received benefits, and I am very happy. In the movie “I am not a drug god”, the status quo of patients who cannot afford to the imported drugs will be changed.
Reporter: Please talk about the influence and relationship of Chinese consumption on the world.
Liu Siwei: Nowadays, the imported products used by the people in our country are also increasing. You can see imported fruits everywhere, such as Chilean cherries, tropical fruits from Southeast Asian countries. In addition, our people are out of the country and travel abroad more and more, which is the performance of the internationalization of consumption. There are also more and more international movie blockbusters in China, compared with only a few billion in the past. Last year, China’s movie box office has exceeded RMB60 billion. It can be said that China now buys the world, sells the world, and consumes the world. China's consumer market is in line with the world market, and its openness is getting higher and higher. The Shanghai Import Expo is not only open for one year, but will be held every year in the future. Taking Hunan as an example, Gaoqiao Market has a special foreign product display area; there is Jinxia Duty-free Zone, there is a central region import product trading exhibition area, and a cross-border e-commerce industrial park, where the import and export of goods exhibited, including the products from Europe, Australia, Oceania, Southeast Asia, and from all over the world. Of course, these changes are not exactly taking place last year, they are all gradually accumulated.
Reporter: Professor Liu, what's the problem with the consumer market? Can you talk to our readers?
Liu Siwei: The problem of disorder in the consumer market is still prominent.
Reporter: What are the specific aspects of disorder?
Liu Siwei: Lack of integrity, fraudulent operations continue to occur. Especially the negative performance in the elderly, children's products and health products, is particularly outstanding. There are also pharmaceuticals and rural consumer goods. For example, illegal pyramid schemes, Quan Jian Company, which was investigated recently, is an example. Such things disrupt the market. Financial markets are also very chaotic. For example, bitcoin and online financial fraud are a misunderstanding, and there is a long way to go to govern the market order.
Reporter: Professor Liu, what is the good way to manage these?
Liu Siwei: In order to strengthen the unified management of the market, after the institutional reform last year, the State Council established the General Administration of Market Supervision, which changed the management system of the “ Multi-dragon Water Control” in the past, and there should be a good change. People's livelihood is the consumption of ordinary people. In those years when they did not solve the problem of food and clothing, the people's livelihood is the rice, oil, salt, vinegar, tea, and they eat full and dress warm. Nowadays, people who enter the new era are demanding high. They must not only eat well, but also have good time and rest well. Therefore, leisure consumption, tourism consumption, cultural consumption, healthy consumption, and information consumption are now more and more valued and liked by people.
2019
Steady progress in economic development
Reporter: Professor Liu, you talked a lot about China's consumer economy in 2018, and you said it very well. I would like to ask you to tell the reader about the new year's consumption economic situation analysis.
Liu Siwei: Many people are pessimistic about the economic situation this year, but I am still much optimistic. The reason for my optimism is that China's economy will grow steadily this year. We grew 6.6% last year and will be around 6.5% this year. Last year, Premier Li Keqiang set 6.5 percent in the government's work report, and 6.6 percent at the end of the year, surpassing the target.
Reporter: Professor Liu, what makes you so confident in the economy this year?
Liu Siwei: First of all, China's supply-side structural reforms have achieved stage results. The ability to de-capacity, de-stocking and deleveraging has come up, and the supply-side structural reforms in industry and agriculture have achieved staged success. There is no big product inventory and excess backlog, which is a basic judgment. The second is that the consumption of our country has already come up, and the trend of consumption is the main driving force for China's economic growth. The guiding role of consumption in economic growth is growing, and the contribution rate of consumption to economic growth is rising. China has nearly 1.4 billion of population and is the largest consumer market in the world. China's consumer market has great potential.
Reporter: What is the potential of China's consumer market?
Liu Siwei: According to the opinions made by the National Development and Reform Commission, we have initially formed a middle-income group of more than 400 million people. This group has great potential, and there is also the possibility of consumption blowout. The income of low-and middle-income people is also increasing, which is the driving force of our economic growth. Recent years saw China's scientific and technological innovation capabilities continue to improve, especially original innovation.
Reporter: Professor Liu, what is the specific performance of China's technological innovation capability lifting?
Liu Siwei: The contribution rate of science and technology to economic growth has risen significantly. You see that the number of scientific research papers in China is now the highest in the world, and the number of patent inventions is increasing. The competitiveness of scientific research and innovation has also risen by dozens in the world, and it has reached the top 20. In particular, the development of our new economy, new technologies and new motive power has become more and more prominent in driving the economy.
Reporter: Where is your confidence in economic stability this year?
Liu Siwei: This is also my fourth basic judgment. Policies and capabilities from macro-control are being further improved. Today(reporter's note: on date of 23, January 2109), the State Council promulgates a further tax cut policy. To further reduce the tax revenue of enterprises and ordinary people, the purpose is to further release the innovation ability of everyone, reduce the cost of innovation, reduce the cost of enterprise, and improve the marketing environment. Through strengthening and perfecting macro-control, there will be no systematic financial risk. Our country's goal of precision poverty alleviation is being achieved step by step, and it wins very well in the defense battle for environmental pollution control. Such as Dongting Lake harness, Xiangjiang River basin water pollution treatment and so on.
Reporter: so, is there any possibility of financial risk?
Liu Siwei: Will we have financial risks? Will there be black swans and grey rhinos? I don 't expect so。 From the beginning of the year, the CPC Central Committee hosted a training course for leading cadres of provincial departments in Beijing, the theme of which is to guard against risks and hold the bottom line. This includes the prevention of financial risks. Keep the bottom line that systemic financial risk does not occur, the risk occurring possibility in estimation is very small. At the same time, the value of the Renminbi is relatively stable, has been within the normal range of controllable fluctuations, and the dollar RMB exchange rate is 1: 7 below. Then domestic commercial banks pay attention to the risk of debt prevention, in addition, there will be no inflation in the Chinese market.
Future
Green consumption becomes the mainstream of mass consumption
Reporter: Please talk about the trend of mass consumption this year
Liu Siwei: In 2019, quality consumption, mass consumption, green consumption, ecological civilization consumption will become the mainstream and trend of consumption. In terms of house consumer, people will have higher demands on the environment. Children's supplies, children's food, will develop in the direction of green health. Second, some special groups, especially the three major groups, the consumption of the elderly group, the consumption of children, the consumption of infants and young children after the policy release of giving birth to the second child, the middle-class consumer groups in the city pay more attention to quality and more emphasis on quality, such as quality standards, the comfort of life consumption and the feeling after consumption. In the past, many people shop online, only like the cheap, and they bought a lot of fake and inferior products, but now their online shopping is focusing more on suppliers’ reputation. They pay attention to quality, and the sound quality products.
Reporter: Will the order of the consumer market be improved this year? Why?
Liu Siwei: This year is the 70th anniversary of the new China, and the consumer market will definitely be improved. At the beginning of the year, the State Administration of Market Supervision stepped up its efforts to further crack down on malicious fraud, further crack down on illegal pyramid sales, further crack down on counterfeit and shoddy goods, maintain the order of the consumer market, and create a more healthy, safer and more secure consumer environment. It will be a very important topic for us this year. Only in this way can we further release the consumption potential and make consumption safer.
Reporter: In addition to the General Administration of Market Supervision, what measures will the state have in terms of policy?
Liu Siwei: In this respect, it is estimated that there will be some important measures this year. Further implementation of the "Opinions" jointly issued by the CPC Central Committee and the State Council will further introduce some policies to promote consumption, such as consumer credit, that is, consumer finance. Especially for consumer finance of rural residents, it is estimated that there will be some new measures. In addition, it will pay more attention to the innovation of the consumer terminal business format, such as Internet + community chain stores, convenience stores, these convenient business models will be more supportive. In recent years, Changsha has developed rapidly supermarkets, such as Furong Xingsheng, Weiran Jinhe, Homey-Store and so on. Competition in community supermarkets will become more and more fierce, and this new business situation will emerge in an endless stream. If those meet the needs of ordinary people and attract the consumption of ordinary people will have vitality. At the same time, the state will further optimize the consumption supply structure and increase effective supply.
Reporter: As Hunan people, please talk about the advantages of Hunan consumption economy development in 2019?
Liu Siwei: Hunan has many advantages. Due to the improvement of the Hunan traffic system, Hunan traffic is now particularly developed, especially after the opening of the Shaoheng high-speed railway (Huai Hua- Shaoyang- Hengyang), the Hunan high-speed railway has become a system, and the expressway has also become a system. For example, the roads around Dongting Lake have become a system. In this way, the people are more convenient to travel, and they have more convenience for the short-term travel, and the tourism industry will develop more rapidly.
Reporter: Professor Liu, I finally asked you a question. What do you think about the overstep consumption of young people now?
Liu Siwei: The change of consumption concepts of Post-2000 and post-1990 people should be the progress of our consumption concepts. Our traditional consumption used to be that our sons spent the money of the elderly. The money we spent today is that of yesterday. Today's young people spend today's money is that of tomorrow, they dare to spend. There are two reasons: One is that the level of education has been improved and new consumption concepts dare to be accepted. Second, young people are optimistic about their future income. Loan to buy a car, buy a house, indicating that I can afford it. Dare to pay back and be able to pay back. I don’t take a negative attitude towards the “groups that spend all their money every month”, but we must do our best and not borrow excessively. In the past, it was difficult to increase the consumption power and reduce the savings rate. However, in recent years, the savings rate has dropped significantly, but the decline shall not be too much. The key is moderate. The central government advocates the release of consumption potential is to reduce savings, spend on the suitable place. Of course, there is advocating scientific consumption and opposing waste.
