Patterns of consumption change

"I seldom go shopping now," said Zhang Lin, who purchased his mobile phone over the Internet. "Buying through the Internet is more comfortable. How easy it is to sit in front of the computer and choose things at online shops. After just several clicks, goods are sent to my home. They are also cheap."

Like Zhang notes above, online shopping is becoming more popular in China. According to a report released by the China Internet Network Information Center (CNNIC), around 30 million Chinese, or about one-fourth of all Internet users in China, shop online.

Figures from the CNNIC show that in 2006, e-commerce transactions in China amounted to 1.1 trillion yuan. Cosmetics and mobile phones enjoyed the largest transaction volumes. Take taobao.com as an example. In 2006, 5.3 billion yuan worth of mobile phones and components were sold through it, nearly equaling the 6 billion yuan of in-store sales by D.Phone, the largest mobile phone retailer in China.

Health care products have also become a new growth point for consumption in urban areas. In Yuan's introduction, among urban residents, 86.1 percent named health as their top priority. Besides daily exercise, more people are choosing to pay for health products. On average, urban residents spend 62.42 yuan on nutrition supplements and health care products, and 148.4 yuan on exercise equipment and services every month.

According to 2006 figures from the Chongqing Survey Organization of the NBS, per-capita health care expenditures of urban residents in the Chongqing Municipality stood at 705.72 yuan, 5.2 times the 1996 figure of 137.15 yuan--experiencing an average annual growth of 17.8 percent. Health care expenditures accounted for 7.5 percent of the total in 2006 compared with 3.1 percent in 1996, up 4.4 percentage points. Increases in health care purchases are expected to continue in 2007.

"The rapid increase in health care expenditures is because people are paying more attention to their health, and nutrition supplements and health care products are becoming hot commodities," said Li Xiaochao, spokesman of the NBS.

Moreover, statistics from the People's Bank of China (PBC), the country's central bank, showed that in the first three months of 2007, loans granted to households increased 157.8 billion yuan to 332.1 billion yuan, year on year. Of the total, mid- and long-term loans increased 170.8 billion yuan. Analysis from the PBC shows that consumption loans granted to households, especially mid- and long-term loans, are increasing very rapidly.

Priming the consumer pump

Earlier, government departments at all levels issued various measures to stimulate consumption, such as enlarging domestic demand, increasing employment, increasing resident income and improving social security.

According to Huang Hai, Vice Minister of Commerce, in 2007 the Ministry of Commerce (MOFCOM) will try to increase consumption expectations, strengthen consumer confidence, widen consumption fields, nurture consumption hot spots, improve consumption environment and upgrade the consumption structure.

"We will strive to expand consumption in rural areas, with focus on improving rural logistics networks, establishing distribution channels catering to rural market development and organizing development of products catering to the needs of farmers," Huang Hai said at a Beijing press conference on April 8.

Compared with urban residents, farmers are not spending much. Although consumption in rural areas grew 12.9 percent in the first quarter this year, farmers who account for 70 percent of China's total population only managed 21 percent of the country's total retail sales. Urban residents contributed nearly 60 percent, with the other 20 percent spent by the government. Since urban residents are the major spending force, insufficient consumption by farmers, the majority of the population, becomes a salient problem in China's economic development. A study made by the MOFCOM shows that every one yuan farmers spend will increase two yuan of consumption demand in the total national economy. In other words, promoting the consumption level of farmers can lift the whole economy.

In the coming months, the MOFCOM will further promote consumption-related policies, adopt fiscal, financial, employment, planning, environmental protection and industrial policies, formulate comprehensive coordinated measures aimed at expanding consumption, and make consumption-related policies more coherent in order to promote the overall consumption capability, Huang added.