ShareBEIJING: China’s domestic demand is gathering pace as cautious consumers increasingly choose to rent items from cameras to handbags rather than buying them, the official People’s Daily said, though government data tell a different story. The rise of the “rent, not buy” model has injected new impetus into the world’s second-largest economy, the paper said in an upbeat commentary on Monday, flagging a trend that provides businesses with a “new perspective”.
As China’s domestic demand weakened this year, reluctance to spend has fed a boom in rentals, with internet platforms letting consumers hire a drone, for example, at 1 yuan (14 cents) a day, versus a typical cost of more than 5,000 yuan ($685). For 35 yuan, one can get a “99 percent new” Louis Vuitton handbag, a listing on a popular app showed.
New forms of demand are giving rise to new consumption formats with “huge” potential, the paper said. State media typically talk up China’s consumption outlook even when government data flag a more sobering trend. Retail sales of consumer goods grew just 3.5 percent in the period from January to November compared with a year earlier, statistics show, as a low-base effect that helped boost 2023’s post-pandemic retail sales by 7.2 percent faded.
The bleak retail landscape stretches beyond small towns and cities to the capital, Beijing, which reported a fall of 2.8 percent in retail sales from January to November, far below the national figure.
To spur consumption, China launched a trade-in scheme this year offering subsidies for purchases when consumers trade in old appliances, bicycles and even cars. Officials say sales surpassed 1 trillion yuan ($137 billion) this year under the program, “unlocking” a wave of consumption yet to show up in government data. China has leaned heavily on manufacturing and exports this year, with household demand deep in the doldrums as a years-long real estate slump depressed consumer wealth and confidence. Economists have urged Beijing to take a more consumer-focused turn in its policies.
At a meeting this month, top officials of the ruling Communist Party said China ought to “vigorously” boost consumption next year and seek to expand domestic demand “in all directions”.
“With the development of (China’s) economy and society, the trend of consumption upgrading is obvious,” the People’s Daily said. “But both are not advancing in step.” – Reuters
