Event:
Since 2020, the epidemic has become a key variable affecting consumption changes in various countries. When the epidemic spreads, consumption weakens, and when the epidemic slows down, consumption rebounds. During the two years of the anti epidemic, China's consumption recovery can be said to be a wave of twists and turns and highly limited. By the end of 2021, the growth rate of national consumer expenditure was still less than 70% of that before the epidemic. How will consumption evolve in the process of China adhering to the "dynamic clearing" and gradually opening its door in the future? This paper attempts to explore the path and height of China's consumption restoration from an overseas perspective.
Core view:
From the perspective of the dichotomy of residents' income and savings rate, the residents' savings rate has dropped significantly, but the epidemic has repeatedly added variables. In addition, the problem of income structural differentiation is still ongoing, and the recovery of residents' consumption is uncertain, which highly depends on China's epidemic prevention policy and the effect of steady growth. Structurally, the focus of future consumption recovery lies in the service industry. From overseas experience, after the relaxation of epidemic control, the recovery of catering and accommodation industries is high, while the recovery of entertainment and transportation services is relatively slow, and there is still a gap in upward repair.
The key to promoting the recovery of China's consumption lies in residents' income
In short, the intensity of consumer spending depends on Residents' disposable income and residents' savings rate. The impetus to promote the recovery of residents' income depends on the degree of epidemic control and various support policies, so it is greatly affected by the policies; There are many variables affecting residents' savings rate, and the effect of policy regulation is relatively weak.
From the perspective of China's situation, the first recovery of residents' income is the basis for promoting the recovery of consumption. The improvement of China's epidemic situation and the decline of savings rate are the driving force for further promoting the recovery of consumption. Under the background of controllable epidemic situation, the higher savings rate of residents has gradually dropped, and the key to restricting the recovery of consumption will turn to residents' income.
Although the household savings rate has fallen, the epidemic has repeatedly added variables
From overseas experience, the degree of epidemic control determines the change direction of residents' savings rate. After Britain and the United States relaxed the control of the epidemic, their household savings rate has basically returned to the pre epidemic level. However, due to the relatively strict control of the epidemic in China and Japan and the obvious structural differentiation of residents' income, the residents' savings rate is higher than that before the epidemic.
How high will consumption repair be in the future?
The recovery of residents' consumption is still uncertain, which highly depends on China's epidemic prevention policy and the effect of steady growth. In the short term, the epidemic situation is repeated, the travel intensity of residents is greatly reduced, and the consumption is under pressure in the second quarter. Referring to the outbreak in early 2020, the per capita consumption expenditure of national residents decreased by 8.2% and 3.3% year-on-year respectively in the second quarter and third quarter of that year. In the medium term, if the epidemic situation improves in the future, consumption will continue to recover gradually. Under optimistic circumstances, the growth rate of consumption this year and next may return to 8-9% before the epidemic.
If the country is opened after the two sessions next year, the entry control measures will be gradually relaxed, but the epidemic in China may rebound again, and the prevention and control policies may be tightened, leading to the slowdown of the recovery process of consumption again. Referring to Singapore's experience, the income of catering, transportation and other service industries has lost 10% - 20% compared with that before the epidemic. In 2020, China's expenditure on living services will account for about 35%, and the corresponding consumer expenditure may be reduced by more than 3.5 percentage points compared with that before the epidemic.
The focus of future consumption recovery lies in the service industry, but there is a gap in upward repair
The direct driving force to promote the repair of the service industry comes from the relaxation of epidemic control. However, from the experience of Europe and the United States, even in countries with relatively loose control, the growth rate of service industry expenditure has not been fully corrected, which is generally reduced by about 5% compared with trend items. Structurally, after the epidemic eased, the catering and accommodation industries are the most favorable. The growth rate of relevant expenditure in Britain and the United States has been close to the level before the epidemic, while the repair of expenditure on entertainment and transportation services is relatively slow, with a gap of 10% - 20% compared with that before the epidemic.
Risk warning: the epidemic situation in China has spread on a large scale; China's steady growth is less than expected.
