President Xi Jinping in his speech delivered during the Central Economic Work Conference (CEWC) held in Beijing during 11-12 December 2024 summarised the economic work of 2024 and laid down the key economic tasks for 2025. The challenges faced by China included difficulties on the external front, insufficient domestic demand, pressures on employment and hidden risks and the focus areas for 2025 covered boosting consumption, improving investment efficiency, development of new quality productive forces through scientific and technological innovation and build a modernized industrial system, actively develop service trade, green trade and digital trade, further reform the institutions and mechanisms for promoting foreign investment, steadily open up the service sector, expand the pilot programs in opening up such fields as telecom, healthcare and education, and continue to make China a favoured destination for foreign investment, diffuse risks to avoid systemic risks with thrust on real estate sector, rural revitalisation, among others.
China watchers often focus on overlaps in previous CEWC thrust areas and the new target sectors. In the last 12 years’ CEWC speeches and related documents, there is not a single conference that has not focused on consumption as the driver of China’s growth. President Xi’s speeches at different fora have time and again highlighted the importance of the sector. To name a few: 2012, at the 18th National Congress of the Communist Party of China; 2013 at the Boao Forum for Asia; 2014: Speech at the Chinese People’s Political Consultative Conference (CPPCC); 2015: At the National People’s Congress (NPC); 2017: Addressing the 19th National Congress of the Communist Party of China; 2020: Remarks on Economic Recovery Amid COVID-19; 2021: Central Economic Work Conference, etc. The 2020 and 2021 CEW conferences’ emphasis on “dual circulation” was that in addition to foreign trade and investment, consumption is a key factor in economic growth. The goal was to make consumption a crucial pillar in order to boost local demand and lessen China’s dependency on foreign markets. President Xi Jinping during a meeting of the CPC Central Committee’s Standing Committee of the Political Bureau on May 14, 2020. Since then, this “Dual Circulation Strategy” (DCS) has been mentioned in nearly all of President Xi’s important speeches and meetings, including at the World Economic Forum on August 24, 2021, the Fifth Plenary Session on October 26–29, 2021, and the Central Economic Work Conference (CEWC) on December 18, 2021. The phrase has been overused by the Chinese media to highlight a new development model where demand from both domestic and foreign sources complements one another.
Most of the writings on CEWC and its proposed work plan assess how consumption and investment in China have been faring over the years mainly with the aim of bringing the challenges toward the stated aim of the CEWC to the fore. What is found to be missing is the interesting and also the first-time reference of any CEWC “to develop debut economy, ice and snow economy and silver economy”. Post CEWC 2024, Global Times clarified on the concept of the “debut economy” to refer to a range of economic activities involving the launch of new products, new business models, new services, or new technologies, as well as new flagship store openings. Moreover, since the conclusion of CEWC 2024 and deciphering of the same by experts worldwide, Chinese state media has been on a spree of write ups on highlighting how these segments are adding “new vitality” to China’s economy.
Ice and snow economies refer to the economic activity associated with winter sports, travel, infrastructure, and products, all of which flourish in areas with snow and cold temperatures. China hopes to get 300 million people to engage in winter sports by 2025, with the 2022 Beijing Winter Olympics acting as a primary impetus. This is expected to increase the market for activities involving ice and snow. This may be seen as part of efforts geared towards attaining overarching objectives of: boosting the local economy and increasing tourism in frigid climates, increasing engagement in winter and creating new winter sports-related industries to diversify China’s economy. It is anticipated that China’s ice and snow economy would generate new job possibilities, particularly in areas where snow and ice are important to the economy, such as Beijing, Inner Mongolia, Heilongjiang, and Xinjiang. According to Chinese experts, the plan’s focus on a “full industry chain,” includes everything from manufacturing to services. In late November 2024, China’s State Council announced the plans for the ice and snow industry in China to reach 1.5 trillion yuan ($208 billion) by 2030, with a special emphasis on winter sports, travel, and equipment production. As per Xinhua reports, the first half of 2024 saw revenue growth for China’s top four sportswear brands: Anta, Li-Ning, Xtep, and 361. Together, their total sales surpassed the 60 billion-yuan (8.3 billion US dollars) mark. Global players like Nike and Adidas also claimed strong growth in the Chinese market. From December 2023 to May 2024, Nike’s revenue in China reached 28.12 billion yuan (3.97 billion US dollars), a 3.8 percent year-over-year growth that put it in second place after Anta. Adidas ranked fourth in the Chinese market, behind Li-Ning, with revenue of 13.17 billion yuan (1.86 billion US dollars), up 4.2 percent. While these are the emerging and promising segments in Chinese changing consumption patterns, these need to be monitored overtime on account of the linkages with tourism and foreign investment flowing in the specific sectors in China. According to China’s National Bureau of Statistics, in the first half of 2024, spending on sports and recreational articles was up 11.1%, and was the second fastest growing segment tracked after telecom communications at 11.4%. The growing demand for winter sports equipment is one of the many trends in the winter sports business that are regularly covered by China Daily and Xinhua News where the growing presence of well-known brands in China, like Atomic, Decathlon, and Rossignol is covered. However, to what extent the emerging segments can push consumption and lead to economic growth stands the test of time. As per limited research on the subject, there are challenges with regard to infrastructure and terrain. A shortened snow season and unpredictable snowfall due to climate change could present challenges for ice and snow sport training and practice. Additionally, the disparity in development is apparent since many areas lack sports facilities and snow supplies, which leads to an unequal growth of ice and snow sports. While China has come up with a dedicated plan to promote new segments such as ice and snow activity, this can not supplement or compensate for the structural challenges faced by the economy.
One of the very commonly highlighted structural challenges of China’s economy has been its ageing population. Interestingly, the focus of policymakers in China picked up since January last year when China released “Opinions on Developing a Silver Economy to Improve the Well-Being of the Elderly” termed as China’s first specific policy guideline for its silver economy. But that’s not the first time China directed efforts towards the silver economy. In 2022, China’s Ministry of Commerce issued the Catalogue of Encouraged Industries for Foreign Investment to attract foreign capital to invest in various sectors of the elderly care industry. China is now offering a number of recommendations on ways to enhance elder care services and make use of the new opportunities presented by its aging population. This move brings to the fore a new supply chain dimension with the involvement of a range of sectors such as healthcare, transport, banking, the leisure industry and the construction industry. Recently, Singapore-based Perennial Holdings expressed investment interest in China’s silver economy guided by returns in the premium care and services for age group above 60. However, the main demographic challenge of low birth rates and marriage rates remains in China. A connected internal economic challenge faced by the Chinese economy still is that of youth unemployment. China’s youth unemployment for the age group 16-24 reaching record high numbers in 2023. China’s youth unemployment rate had previously climbed to record highs exceeding 20% (reaching 21.3 in June 2023) before the country’s National Bureau of Statistics temporarily suspended the release of the data, citing the need to reassess calculation methods. NBS has resumed (December 2023 data released in January 2024) publishing the youth unemployment numbers with the new methodology yielding lower numbers along with a new unemployment rate for 25-29 years old bracket. Excluding students, China’s jobless rate stood at 14.9% for people between 16 and 24 in December 2023, using the new method, which excludes students. The unemployment rate for the 25-29 years old stood at 6.1% in December 2023 with overall unemployment rate at 5.1% for the same period. In 2024, youth unemployment peaked at 18.8% in August 2024 with November 2024 figure of 16.1%. The categorisation of unemployment metrices in China as masking hidden and high unemployment has already gained enough traction.
While China’s consumer landscape is changing with newer segments such as ice and snow and silver economy to be supporters of economic growth, the real demand side economic challenges in the form of demographic challenges and youth unemployment are serious concerns.
