Rising consumer demand in counties and townships becomes new driver of continuous consumption growth in China

In recent years, residents in China’s counties and townships have shown constantly growing desire for consumption, injecting fresh vitality into the continuous consumption growth in the country, which has more than 2,000 counties and 35,000 townships.

With increasing income, residents in rural areas of China have gained stronger spending power. According to official statistics, the gap between urban and rural incomes has continued to narrow in China over recent years, when the growth rates of rural residents’ income and consumption have both outpaced that of urban residents.

Last year, the per capita disposable income of China’s rural residents stood at 17,131 yuan (about $2,653.59), registering an actual growth rate that was 2.6 percentage points higher than that of the country’s urban residents.

The per capita consumption expenditure of rural residents in China was 13,713 yuan, and secured an actual growth rate that was 5.9 percentage points higher than that of urban residents in the country.

Not long ago, Wang Song, a farmer in Caiyuan village, Tangwan township, Guixi city, east China’s Jiangxi province, bought a car as he secured a steady source of income from growing Hami melons with the help of agricultural technicians sent by the municipal government of Guixi.

“I promised my wife that we would have our own car someday. We have started our own business and worked hard for our dream, and now it finally comes true,” Wang said. His family sees an annual income of around 150,000 yuan from growing Hami melons.

Thanks to various favorable policies rolled out to support and benefit agriculture, rural areas and farmers, people in Caiyuan village like Wang have enjoyed better lives by running agritainment restaurants and engaging in characteristic agriculture.

The total retail sales of consumer goods in China’s rural areas have maintained at about 6 trillion yuan in recent years, and seen a growth rate higher than that in urban areas of the country since 2012.

In 2020, the online retail sales in rural areas of China reached 1.79 trillion yuan, up 8.9 percent from the previous year.

Rural residents have shown strong demand for consumption upgrading, said Fu Yifu, a researcher at the Suning Institute of Finance, explaining that the consumption of durable goods and services by rural residents in China has grown constantly, while online shopping gains increasing popularity in rural areas.

Two months ago, Hong Shaobing, a resident in Yulong township, Xingyang, central China’s Henan province, bought a floor mopping robot from Chinese e-commerce platform Pinduoduo. Thanks to the robot helper, Hong’s mother can have her floor well cleaned by the time the breakfast is ready every morning.

Last year, the number of orders for goods priced above 500 yuan rose by 79 percent year on year in counties and townships in China, while product categories including home textiles, digital products, and outdoor products enjoyed an over 140 percent growth in value of sales, according to data from Pinduoduo.

Intelligent household electrical appliances and general merchandise on the platform have been popular with consumers in China’s counties and townships.

In particular, since the annual June 18 online sales promotion campaign in 2020, the number of orders placed by consumers from China’s counties and townships for 3C digital products (computers, communication and consumer electronics) via Pinduoduo has outpaced that of orders from first- and second-tier cities of the country for the first time.

Data from China’s e-commerce giant JD.com revealed that the growth in the volume of transactions of cosmetics, beauty products, and digital products in China’s counties and villages last year surpassed the overall growth in the volume of transactions of these products purchased via JD.com.

In addition, as people have become increasingly health-conscious since the outbreak of the COVID-19 pandemic, rural consumers in China’s counties have seen a significant surge in the consumption of health products, according to JD.com.

“Consumer demand in counties and townships shows a trend toward branded products and cost-effective products,” said Liu Zhongqi, deputy head of the research institute of new consumption of Pinduoduo.

Residents in counties and townships of China are willing to pay premiums of certain brands, especially those in such areas as 3C digital products, home appliances, kitchen appliances, stylish clothing, shoes, and hats, Liu said, adding that consumption of services in such fields as tourism, transportation, education, training, cultural recreation has also become an increasingly important part in the lives of people living in China’s counties and townships.

Infrastructure improvements have played an important role in the popularity of high-quality goods and services in lower-tier markets of the country.

As of the end of 2019, the total length of rural roads in China exceeded four million kilometers, all the administrative townships and villages with proper conditions had hardened roads, and 95 percent of the country’s townships were covered by express services.

In 2020, China built 2,120 county-level e-commerce public service centers and logistics distribution centers, and 137,000 village-level e-commerce service centers.

Improvement in infrastructure facilities for transportation, communications, and Internet services, the return of rural talents, increase in brand awareness, and active efforts of local governments are all helpful for invigorating consumption in counties and townships, according to Zuo Chenming, secretary general of Alibaba’s new countryside research center, noting that counties and townships in China are expected to witness further increase in people’s overall spending power.