China's consumption market is undergoing a qualitative transformation. The new market trend of "one increase and one decrease" show the country is moving toward building a new domestic consumption system by integrating online and offline consumption.

"One increase" refers to the increase in total retail sales of consumer goods from January to May, indicating the consumption market's continued recovery. And "one decrease" means the appeal of large e-commerce shopping festivals has weakened, with the sector experiencing negative growth for the first time, perhaps because new shopping models are posing a new challenge and have intensified market competition thanks to the emergence of more, diverse consumption choices.

The trend of "one increase and one decrease" and the COVID-19 pandemic have played important roles in reshaping consumer behavior, transforming the digital ecology and raising consumption demand in the first half of this year.

Besides, the emerging consumption trend, of "one old and one new", can help upgrade "the fourth consumption structure" in this "Year of Consumption Promotion" — the Ministry of Commerce designated 2024 as the "Year of Consumption Promotion" early this year. "One old" means the consumption market will continue to perform with new vitality thanks to the subsidies for trade in consumer goods. And "one new" means artificial intelligence technology will create new consumption patterns and facilitate the transformation of consumption and industrial structures. Not to forget the development of generative AI can integrate digital goods and AI to connect everything, giving rise to yet another consumption trend.

The new consumption era is reflected in intelligent terminal products, the application of extended reality and AI facilities that have been widely adopted as marketing tools to promote consumption, and have enriched customers' experience and made market operations more effective.

As disruptive technologies drive the fourth transformation of consumption and industrial structures, new quality consumption forces seem set to generate new momentum for high-quality economic development and integrate online and offline consumption. New quality consumption forces can also help boost consumers' confidence and increase their sense of gain, promoting high-quality development.

Since consumption, or the lack of it, determines new development patterns and the health of an economy, it is essential to establish a long-term mechanism to facilitate sustainable development by unleashing suppressed consumption potential. For that, the government needs to take measures to stabilize people's income, rather to increase their income, make creating new jobs a policy priority, improve the income distribution system, promote the sustained recovery of consumption and develop new quality consumption forces.

The government also needs to accord priority to boosting consumption, increasing consumption capacity, fostering new types of consumption, taking steps to bridge urban-rural consumption gap, and expeditiously upgrading the consumption structure, as well as integrating online and offline consumption based on the following suggestions:

First, the government should issue support policies for enterprises engaged in providing goods and services for new types of consumption including live-streaming e-commerce and "new sales", and promote innovation in technology, products and service models to give consumers more satisfaction and enrich their experience.

Second, the authorities should strengthen the monitoring of livestreaming e-commerce and "new sales" to ensure only genuine products are supplied or sold and professional after-sales service is provided, so as to build deeper consumer trust.

Third, the government should also provide such enterprises with financial support to enable them to face fair market competition and maintain continuous growth.

Moreover, since trade in consumer goods and AI technology can help accelerate domestic economic circulation, subsidies and tax incentives should be given to enterprises, in order to encourage them to continue trading in consumer goods, and measures taken to increase green consumption to encourage enterprises to develop and promote energy-saving products.

While AI technology should be used to raise consumption through investment and policy support, subsidies and favorable policies should be introduced to encourage the purchase of intelligent terminal products. Also, new and traditional industries should be integrated to facilitate upgrading, and traditional industries need to employ new technologies and follow new models to develop smart manufacturing.

Measures should also be taken to optimize the consumption environment and build new types of consumption infrastructure such as 5G base stations and the internet of things networks. Moreover, the cooperative development of rural and urban consumption can accelerate the construction of international consumption hubs to improve consumption levels in urban areas.

The author is an associate researcher of the National School of Development at Peking University.The views don't necessarily reflect those of China Daily.

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