HONG KONG – China’s transformation from a manufacturing-driven and export-led economy to one underpinned by services and domestic consumption is firmly underway. And that’s good news not just for China, but also for the future of the global economy.
The 2016-17 edition of the Blue Book of China’s Commercial Sector by Fung Business Intelligence and the Chinese Academy of Social Sciences maps the change. China’s retail markets reached CN¥30 trillion ($4.6 trillion) in 2015, after more than a decade of double-digit growth. Household consumption has begun to climb, even as the pace of investment has fallen, and now exceeds 60% of GDP. Though the consumption growth rate has slowed to 10.7%, the Blue Book projects that China’s domestic market may reach CN¥50 trillion by 2020.
A key driver of this transformation has been Internet technology. Building on heavy investments in public infrastructure, such as ports, airports, roads, rail, and telecommunications, the Internet is now expanding rapidly the range of choices available to Chinese consumers, while lowering costs and accelerating delivery.
As a result, China’s online retail sales have surged in recent years, from 6.3% of total retail sales in 2012 to 12.9% by 2015. By 2020, 40% of all retail transactions in China may be conducted online. Online sales via mobile phones have jumped from only 1.5% in 2011 to 55.5% in 2015, and may reach 73.8% by 2018.