Q1-Q3 recovery backed by online sales

China's consumption market saw steady recovery in the first three quarters, with online sales driving growth and providing economic momentum.

In the January-September period, the contribution of consumption to economic growth reached 41.3 percent, driving GDP growth by 1.2 percentage points. In the third quarter, China's final consumption expenditure contributed 52.4 percent to economic growth, driving GDP growth by 2.1 percentage points, the National Bureau of Statistics said on Monday.

In the first nine months, online sales nationwide increased steadily and reached 9.59 trillion yuan ($1.32 trillion), up 4 percent year-on-year. Among them, online retail sales of physical goods reached 8.24 trillion yuan, up 6.1 percent year-on-year, the NBS said.

"E-commerce has further demonstrated its role in driving consumption growth. Retail business at brick-and-mortar stores has also gradually improved, and sales of basic living goods have seen booming growth. In addition, demand for green consumption has continued to grow, and sales in rural markets recovered well," said Dong Lihua, director of the Trade and Economic Department at the NBS.

"In the first three quarters, all departments effectively coordinated COVID-19 pandemic prevention and control measures along with economic and social development. They actively implemented a series of consumption promotion policies, and the consumer market maintained a recovery trend," Dong said.

Despite sporadic resurgences of COVID-19 cases, the consumption market has recovered, albeit with fluctuations. In April, the level of total retail sales of consumer goods reached a low point, and it began to grow again since June. In September, the number increased by 2.5 percent year-on-year, which was 2.9 percentage points lower than the growth rate in August, the NBS said.

In the January-September period, total retail sales of consumer goods totaled 32.03 trillion yuan, up 0.7 percent year-on-year, reversing the downward trend in the first half, when the number fell 0.7 percent year-on-year, the NBS said.

In the second quarter, the pandemic caused some restrictions on household consumption of goods and services, but the negative impact weakened in the third quarter. Meanwhile, the state of employment improved in the third quarter, enhancing consumer confidence, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

In addition, from June 1, the government has halved car purchase taxes for passenger vehicles that cost less than 300,000 yuan each and have engine capacities of two liters or lower. The stimulus measure has taken effect and spurred consumption, Wang said.

With the upcoming Singles Day shopping festival culminating on Nov 11, e-commerce shopping is expected to further drive consumption growth.

"Due to the pandemic, e-commerce shopping through channels such as livestreaming sessions and group purchases have served as important platforms, and online shopping has become a new engine to drive consumption growth," said Hou Yunchun, president of the China Enterprise Evaluation Association.