Consumption spurs recovery and growth

China's retail and services sectors are gradually recovering and gaining growth momentum, fueled by better containment of the COVID-19 pandemic and a slew of stimulus measures to spur consumption taking effect, industry experts said.

"Consumption plays a fundamental role in China's economic development and is the main driving force boosting economic growth," said Wang Yun, a researcher with the Academy of Macroeconomic Research.

With the pandemic being contained more effectively and several supportive policies to shore up consumption, China's consumer market is expected to gather growth momentum in the second half and recover from the fallout of COVID-19, Wang said.

She estimated that spending on big-ticket items and service-related consumption will see a strong rebound in the second half of the year.

To further unleash consumption potential and keep major economic indicators within an appropriate range, the country has rolled out a series of detailed measures, including boosting sales of automobiles, home appliances, and other big-ticket items.

The government has halved the car-purchase tax for passenger vehicles with 2-liter engines or smaller and priced at no more than 300,000 yuan effective from June 1 to the end of the year. Some 1.1 million cars enjoyed China's car-purchase tax cut during the first month of the policy's implementation, saving about 7.1 billion yuan for car buyers, said the State Taxation Administration.

"The introduction of a raft of stimulus measures to spur consumption plays a significant role in stimulating consumers' purchasing appetites, promoting the recovery of consumption and stabilizing economic performance," Wang said.

In the long run, fully tapping consumption potential and upgrading the channels and services in lower-tier cities and rural areas will remain key measures to fuel the recovery of consumption in China, said Zhang Xun, managing director of Accenture Strategy& Consulting Greater China, adding he is upbeat about the medium and long-term development of the country's consumption market.

Source from State taxation administration of the P.R.C.

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