BEIJING: China will select some 15 cities for a pioneering two-year pilot program aimed at building a world-class consumption environment, and attracting spending from overseas tourists.
Analysts said the goal is not merely about stimulating domestic demand, but about refining the country’s consumption ecosystem to international standards, which in turn will drive product and service upgrades and catalyze sustainable economic growth.
Last year, consumption from inbound tourists in China accounted for approximately 0.5 percent of the country’s GDP, while the ratio in major world economies ranges from 1 to 3 percent, indicating significant untapped potential for inbound tourism consumption.
To this end, the Ministry of Finance and the Ministry of Commerce in late September rolled out a suite of measures designed to create a more attractive and convenient marketplace, to cement China’s status as a premier global consumption destination.
Eligibility for the pilot extends to cities already designated as international consumption centers, as well as other prefecture-level cities and above that demonstrate strong consumer-driven economies, significant growth potential, and a sizable flow of international tourists, according to the guideline. In 2021, Shanghai, Beijing, Tianjin and Chongqing, as well as Guangzhou in Guangdong province, were identified as the country’s international consumption center cities.
Data released by the Ministry of Commerce showed that as of July this year, total retail sales of consumer goods in these five national-level international consumption center cities accounted for more than one-eighth of the national total.
These cities are also home to a quarter of the national-level demonstration pedestrian streets, around one-third of China’s time-honored brands, over half of the country’s consumer goods imports, and about 70 percent of duty-free sales.
“To enhance the potential of inbound tourism consumption and build a more internationalized consumer environment, these hubs will undoubtedly be the starting point,” said Jiang Zhao, associate researcher at the Chinese Academy of International Trade and Economic Cooperation.
According to the plan, the five international consumption center cities will receive total funds of 200 million yuan ($28.1 million) each, while other pilot cities will be allocated 100 million yuan each.
The subsidies will be paid in two tranches, with only a portion delivered in the first year. The release of the remaining funds is explicitly conditional on a performance evaluation, creating a powerful incentive for local governments to deliver tangible results.
The policy framework, detailed in the recent guideline, moves beyond macroeconomics to a highly practical checklist.
On payments, the guideline offers a clear response to a major pain point. It calls for increasing the coverage of point-of-sale terminals that accept foreign bank cards in key areas, installing more currency exchange kiosks, and ensuring merchants maintain adequate cash reserves to facilitate transactions.
In a society that leapfrogged credit cards to embrace payment apps like Alipay and WeChat Pay, the simple act of paying for a taxi or a museum ticket can become a logistical hurdle for those without a Chinese bank account, said Hong Tao, vice-chairman of the China Consumer Economics Society.
“The goal is to meet international visitors where they are, not where we are,” Hong said. “It’s about creating a ‘bilingual’ experience in payment, just as you would with language or signage. The seamlessness of a transaction is the first impression of our hospitality.” –The Daily Mail-China Daily news exchange item
