Debra Li

debra_lidan@163.com

DESPITE the growth in various aspects reported by e-commerce platforms during this year’s Singles’ Day sales campaign, none have provided detailed figures on their gross merchandise volume. Even JD.com is focusing on “affordable prices” in their advertising, highlighting how discounts and cost-efficiency have become the primary selling points for today’s consumers, who have become more cautious during the anticipated shopping spree.

Nevertheless, con-sumer expenditure in China remains the primary contributor to economic growth. Official statistics reveal that in the first three quarters of this year, consumer expenditure contributed 83.2% to the economy, propelling the GDP by 4.4 percentage points. Investment expenditure also played a role, contributing 29.8% and propelling the GDP by 1.6 percentage points. These figures underscore the importance of stimulating consumer expenditure to strengthen the Chinese economy. The question then becomes: How can this be achieved?

In order for consumers to spend, they need to have money in their pockets. According to data from the People’s Bank of China, the balance of local and foreign currency deposits held by Chinese residents was 128.5 trillion yuan (US$17.8 trillion) as of the end of September. Considering China’s population of 1.4 billion, the per capita deposits amount to 91,400 yuan.

However, it is unjust to average out this data because, excluding a small number of high-net-worth clients, the majority of Chinese citizens do not possess such significant deposits. Data released by China Merchants Bank (CMB) indicates that among its 184 million retail customers, 97.75% are “ordinary” customers with financial assets below 500,000 yuan. Collectively, they only hold 18.62% of the financial assets in the bank. On average, an ordinary CMB customer has a deposit of 12,500 yuan, leaving them with limited cash and confidence to spend.

While the wealthy population also contributes to consumer expenditure, their numbers are too small to significantly boost end sales or the GDP. Additionally, much of their wealth is spent on luxury items, driving sales for foreign firms like LVMH and Gucci rather than benefiting Chinese retailers or manufacturers.

The wealthy individuals are generally not interested in the “spend 200 yuan and get 20 yuan off” promotions offered by e-commerce platforms, nor are they enthused about government food and drink consumption vouchers. Even if some do participate, their contribution to consumer expenditure remains limited due to their small numbers.

When we refer to the world’s largest unified market, we are referring to the 1.4 billion consumers, a majority of whom, unfortunately, do not possess significant disposable income. Therefore, the natural solution lies in boosting the incomes of the common folk.

Increasing employees’ wages and lowering personal income taxes can help achieve this objective. China’s personal income tax system primarily focuses on payroll tax, while certain high-income groups have numerous ways to evade taxes. For instance, if someone earns 3,000 yuan from occasional translation work, they are required to pay 20% of their income (minus 800 yuan) after exceeding a threshold of 800 yuan. In contrast, if an actor is paid 1 million yuan for an acting gig, the tax rate remains at 20%, with only 80% of the total income being taxable.

To unlock the true power of China’s 1.4 billion consumers, the government should devise better social security and services, particularly in the areas of medical care and children’s education. Affordable housing is also crucial in encouraging spending, and many Chinese cities have implemented measures to address this issue.

Boosting the incomes of the common people is not an easy goal to achieve, but it is the only way to cultivate a strong and resilient economy and lay a solid foundation for long-term economic growth.

(The author is a Features editor of Shenzhen Daily.)