Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

China Solidifies US Retail Partnership Amid Shifting Economy

China_Beijing

China’s retail sector doesn’t seem at all concerned about the effect Donald Trump might have on relations with the U.S.

At a 2016 U.S.-China Retail, Logistics & Investment Summit in New York City Thursday, the notion was that trade will bring more employment opportunities for medium enterprises and help sustain the retail sector’s already steady growth.

In the past, China’s economy had been centered on exports, earning it the “world’s factory” moniker, but now that the middle class there is growing, so is domestic consumption.

“Since last year, service and consumption became the number one growth engine,” Jiang Ming, proprietor of China General Chamber of Commerce, said through a translator. “The consumption industry has become one of the main engines of China’s economic growth.”

This year, Ming said, consumption contributed to roughly 71 percent of China’s GDP, compared to 64 percent last year.

China’s GDP growth many have slowed to a long-time low of 6.7% this year but the retail sector has maintained more than 10 percent growth in recent years, coming in at 10.7% this year and higher than any of the country’s other industries. And the retail sector there is only poised to continue its growth trajectory.

Chain stores have become prevalent in the country as consumers adopt more Western shopping habits, and outlet stores are seeing the greatest growth. What’s more, the online channel is helping fuel the consumption habit. Right now in China, there are more than 700 million online users, Ming said, and more than 400 million are online shoppers and the growth is ongoing.

“We are looking at trends of disruption…the quality of consumption or the style of consumption has changed. People actually pursue high-end products,” Ming explained. “It used to be that people only buy necessities but now they are buying the niche and the high-end goods. This upgrading of the consumption habit is key where retailers have to adjust their business to provide the demands of the customer.”

Michael McDonough, global director of economic research and chief economist of Bloomberg L.P. said he expects 6.3% to 6.5% percent GDP growth in China next year.

“For the first time we’re actually in a point where growth is starting to accelerate, where we’re at a point of full employment,” McDonough said. “We do expect that the consumer is going to continue to be the primary driver of growth in 2017.”

More from our brands