Tourists at a rapeseed field within a farming culture park in Tantou Village, southern Jiangxi Province Photo: TUCHONG

Recently, some Western politicians and organizations have frequently touted the thesis that the Chinese economy has peaked, hyping disparaging narratives about the country’s economic prospects. Although claims that China’s growth is sluggish and its prosperity is nearing an end have been proven wrong time and time again, these outrageous tactics have not stopped.

These false narratives attempt to dampen expectations of Chinese enterprises and residents, thereby weakening the international community’s confidence in China’s economy. However, the Western analysts either have an inadequate knowledge of the country’s enormous domestic demand potential and market advantages, with little idea of its economy’s strong resilience and endogenous growth impetus, or deliberately bury the lede, evading key facts.

The Chinese economy’s endogenous power stems from deepening supply-side structural reform and improving domestic demand system. In 2023, final consumption cumulatively contributed 82.5% to overall GDP growth, underscoring consumption’s growing foundational role in economic development. The thriving rural consumer market, an emerging engine of China’s growth, is particularly noteworthy. In the first quarter (Q1) of 2024, retail sales of rural consumer goods hit 1.6047 trillion yuan, up 5.2% year-on-year, which is 0.6 percentage point higher than the urban area rate. With the further deepening of supply-side structural reform and the accelerated construction of a new development pattern, the potential of China’s rural consumer market is continuously expanding and gradually translates into new growth momentum, laying a solid foundation for steady and sustained economic development.

Improved quality of consumption

Since the 18th CPC National Congress, the improvement of infrastructure and the extensive application of internet technology have significantly upgraded the consumption environment in China’s countryside. The rural consumer market has been unimpeded inside and connected to the outside, unblocking urban-rural economic circulation.

In 2023, the total length of rural roads exceeded 4.7 million kilometers. A total of 1,267 county-level public parcel delivery distribution centers, 289,000 rural parcel delivery and logistics service stations, and 190,000 village postal stations were established. Cooperative logistic networks between state-owned China Post and privately run courier enterprises covered more than 70% of China’s administrative villages. Moreover, the number of broadband users reached 192 million, and the internet penetration rate stood at 66.5% in rural areas.

Paved roads, upgraded power grids, and universal broadband access have greatly shortened urban-rural distances, allowing rural residents to enjoy the convenience of modern consumption just like their urban counterparts. The e-commerce boom has created new consumption scenarios for rural residents, who can now purchase a broad range of commodities via e-commerce platforms. This has not only reshaped their spending models, but also further stimulated China’s latent consumption demand.

As agricultural modernization proceeds and rural labor transfers to urban areas, rural people’s income sources have diversified, with their income levels markedly rising. In particular, the quick rise of wage income and operational revenues has effectively strengthened rural residents’ spending power.

In Q1 of 2024, rural people’s per capita disposable income was 6,596 yuan, an increase of 7.7% year-on-year in real terms. The growth rate was 2.9 percentage points higher than the rate in the same period of 2023, and 2.4 percentage points higher than urban residents’ income growth. The urban-rural income ratio was 2.30, down 0.05 year-on-year. Increased income levels have continuously boosted consumer confidence in the countryside, while consumption demands have become increasingly diverse. In Q1 of 2024, rural residents’ per capita consumer spending was 5,050 yuan, up 9.2% year-on-year in real terms. The growth was 5 percentage points faster than the same period of 2023, and 1.5 percentage points higher than that of urban residents. The ratio of urban-rural consumer spending declined to 1.77, down 0.02 year-on-year.

High-quality consumption

The rise of income levels and the improvement of consumption environments have been accompanied by continuous optimization and upgrade of the consumption structure among rural residents, as the consumption model has evolved from meeting basic living needs to pursuing a higher quality of life. Rural residents’ consumer demand has progressively upgraded, prominently characterized by quick consumption growth, huge potential, and a tendency to catch up with urban residents.

In 2023, the Engel coefficient among rural residents was 32.35%, down 0.63 percentage point from 2022. The coefficient’s decrease conformed to a general statistical trend that the proportion of residents’ expenditures on food dropped as incomes grew, which is indicative of their improving standards and quality of life. Compared with the survival-oriented consumption of basic living necessities like food and clothing, rural residents’ development-oriented consumption, such as transportation, communication, education, culture, and entertainment, has grown at a faster pace. In Q1 of 2024, their spending on these development-oriented consumption items rose more quickly than per capita expenditures on eating, drinking, clothing, and housing.

Meanwhile, rural people have been seeking more convenient ways to travel and communicate, as well as relaxing and comfortable home lifestyles. This has continued to stimulate consumption demand for durables. From 2013 to 2022, the popularization of durable goods such as automobiles and home appliances accelerated in the countryside. At the end of 2022, in particular, car and electric scooter ownerships for every 100 rural households were 3.3 and 2.0 times, respectively, those of 2013. Nonetheless, the rural durable market remains unsaturated.

The continued rise of expenditure for development-oriented consumption and the significant consumption growth of durables reflect rural residents’ pursuit of higher-quality lives. With the implementation of a series of policies for supporting and building greater strength in agriculture, rural residents’ incomes are expected to increase steadily, further narrowing the gap between urban and rural residents in terms of consumption structure. Rural people’s consumer demand for health, leisure, and education will continue to grow, so will their preference for green, smart, and personalized products. This trend mirrors the shift in rural residents’ spending philosophy, and heralds broad prospects for the rural consumer market. With the further enhancement of their spending power and the continued optimization of the consumption structure, high-quality consumption will become a new highlight of the rural consumer market.

Rural tourism, leisure agriculture

As the Chinese government effectively advances rural revitalization across the board, new scenarios and new business formats have sprung up in the rural consumer market, and the overall quality of the industrial chain has improved considerably, demonstrating growing appeal to rural and urban residents alike.

In recent years, rural tourism and leisure agriculture have thrived as a key engine driving the rural consumer market and promoting rural revitalization. In 2023, as tourism thoroughly recovered, the tourist market in rural China began to display strong momentum with a continuously expanding market share.

The highly integrated development of agriculture and tourism, science popularization, and health services, has fostered new economic growth points for consumption upgrade in the rural consumer market. The penetration of digital technology in the countryside has also instilled intelligence into rural tourism and leisure agriculture, generating new models in the rural consumer market and empowering it to move into the fast lane of high-quality development.

In 2023, China saw an increase of 256 beautiful leisure villages, bringing the total number of these villages to 1,953. There were 1,597 key villages and townships selected for national-level rural tourism and more than 6,000 key villages and townships for provincial-level rural tourism. Thanks to preferential policies and financial support, rural tourism and leisure agriculture, with these key villages and townships as the carrier, have steadily been upgraded, alongside constant innovation in tourism projects.

Take Ctrip, the largest online travel agency in China, as an example. In 2023, an average of 1.4 new rural tourism products was introduced each day, culminating in a record high of 330,000 guesthouses listed online. Colorful festive events and the promotion of agri-tourism have not only enriched rural residents’ intellectual and cultural life, but also injected new impetus into the diverse development of local economy, providing more job opportunities and entrepreneurial platforms for people in the countryside. Tourism projects like agritainment and guest housing have contributed to rising rural incomes and improved quality of life. In 2023, rural residents’ net operational revenues of the tertiary industry grew 18.5% year-on-year.

Cultural empowerment

Cultural empowerment is becoming a powerful driver of the rural consumer market’s development. In the grand course of rural revitalization, traditional culture and consumption innovation are intertwined, infusing new vigor into the rural economy. In 2023, village-level sporting events in southwest China’s Guizhou Province, such as the “Village Super League” (a rural football game) and the “Village BA” (a rural basketball tournament), electrified rural society. Organized by villagers themselves, these sporting events not only revealed new intellectual and cultural pursuits for rural residents, but also highlighted their aspiration for healthy lifestyles. Phenomenal sporting events in rural areas suggest that intellectual and cultural demands have gradually gained importance in rural residents’ lives.

At the same time, the extensive launch of intangible cultural heritage experiences and activities has also inspired innovative consumption of cultural products. In 2023, the seventh batch of China’s important agricultural cultural heritage programs, comprising a total of 50 traditional cultural systems, was certified, bringing the cumulative number of certified important Chinese agricultural cultural heritage items to 188. Furthermore, 1,336 villages were incorporated into the sixth batch of the Chinese Traditional Villages List. The number of traditional villages now totals 8,155, marking a new development stage in the protection of these villages.

Traditional culture has facilitated the deep integration of the cultural industry and the rural economy. The combination of cultural empowerment and consumption innovation has enhanced rural residents’ life quality, while opening new paths for the rural economy’s prosperous development, evidencing culture’s tremendous promise in empowering the rural consumer market.

The vast countryside boasts immense consumption potential. The flourishing rural consumer market has provided pivotal internal drive for China to expand domestic demand and stabilize growth. It will continue to inject new vitality into the Chinese economy’s sustained, healthy development.

Quan Shiwen (associate research fellow) and Qiao Hui (assistant research fellow) are from the Rural Development Institute at the Chinese Academy of Social Sciences.