Retail sales bounce back last year to hit record

China's retail sector recovered rapidly in 2023 after the country optimized its COVID-19 response measures, with total retail sales hitting a record high and accommodation and catering businesses witnessing significant growth, the National Bureau of Statistics said on Wednesday.

Last year, total retail sales stood at 47.15 trillion yuan ($6.5 trillion), up 7.2 percent year-on-year. Retail sales of merchandise stood at 41.86 trillion yuan, up 5.8 percent on a yearly basis, the NBS said.

The rapid recovery of services consumption was a major highlight of recovery last year. Retail sales of services in 2023 increased 20 percent over 2022, and per capita service consumption expenditure rose 14.4 percent on a yearly basis.

"The consumption market was previously greatly affected by the pandemic, and many contact-based services were restricted. With the economy fully resuming regular operations, consumption showed a good trend of recovery and stood as an important force that drove economic recovery in 2023," said Kang Yi, head of the NBS.

"We remain optimistic about consumption growth in 2024. With the continuous recovery of the economy and overall improvement of employment, household incomes are expected to maintain stable growth, which will support consumption growth," Kang said.

China's economic structure has continued to improve, highlighting the role of the services sector and consumption as engines driving economic growth.

Last year, the contribution rate of consumption to economic growth reached 82.5 percent, up 43.1 percentage points over 2022. In addition, the added value of the service sectors accounted for 54.6 percent of the GDP, an increase of 1.2 percentage points from the previous year.

In 2023, retail sales in urban areas came in at 40.75 trillion yuan, up 7.1 percent year-on-year, with the corresponding figure for rural areas reaching 6.4 trillion yuan, up 8 percent year-on-year, the NBS said.

Sales of everyday products such as clothing, footwear, grains and edible oils saw steady growth. Sales of jewelry, sports and entertainment goods as well as telecom equipment also enjoyed robust expansion, the NBS said.

A number of major department stores expect to report rosy business performances for 2023, fueled by the continuously growing vitality of offline consumption. Chongqing Department Store Co Ltd is expected to report a net profit of 1.25 billion yuan to 1.37 billion yuan for last year, an increase of 41.5-55.1 percent compared with 2022, it projected on Tuesday.

Total online retail sales in China reached 15.43 trillion yuan in 2023, up 11 percent over 2022. Among the total, online retail sales of physical goods reached 13.02 trillion yuan, accounting for 27.6 percent of total retail sales, up 8.4 percent year-on-year, the NBS added.

Meanwhile, the country's total catering revenue reached 5.29 trillion yuan in 2023, growing 20.4 percent year-on-year.

Time-honored restaurant chain Tongqinglou said in its latest earnings forecast that its net profit in 2023 is expected to be between 273 million yuan and 320 million yuan, surging between 191.4 percent and 242.1 percent year-on-year. In the fourth quarter, it opened five new restaurants.

China's huge consumption potential is supported by a population of more than 1.4 billion. Ongoing urbanization and continuous upgrading of the consumption structure will provide broader space for further consumption growth, especially in the areas of medical treatment and healthcare, the NBS said.

"After the pandemic, Chinese consumers have been increasingly pursuing healthy and high-quality consumer goods and services, and paying attention to improving physical fitness. The habit of online shopping has further strengthened," said Fu Yifu, a senior researcher at the Star Atlas Institute of Finance.

"The government could help create more consumption scenarios and optimize consumer experiences to further whet consumers' spending appetites," Fu said.