The Communist Party of China (CPC) virus epidemic severely hit small and medium-sized enterprises in 2020, and the disposable income of residents declined significantly by 25%, making it difficult to expect a major upturn in consumption in 2021, said Lin Caiyi, vice president of the China Chief Economist Forum Research Institute.
The Communist Party’s viral epidemic has had a huge impact on China’s economy, and the impact on residents’ consumption has been particularly severe. According to official Communist Party data, China’s consumption growth rate fell 4.8 year-on-year as of November 2020, failing to turn from negative to positive.
Sohu Finance reported on Jan. 6 that Lin Caiyi, vice president of the China Chief Economist Forum Research Institute, said in an interview with Sohu Intelligence Online that the CCP’s virus epidemic in 2020 severely impacted small and medium-sized enterprises, and the disposable income of residents declined significantly by 25 percent, making it difficult to see a major upturn in consumption in 2021, and the economy still needs investment support.
In Lin Caiyi’s view, the CCP virus epidemic coupled with changes in the external trade environment has led to shrinking demand, a continued slump in SMEs, a significant shrinkage in residents’ wage incomes, and a large impact on optional consumption. At present, the risk of a resurgence of the epidemic triggered by the mutation of the CCP virus is rising, and entry and exit are blocked, and high-end consumption is also expected to be affected in 2021.
Sohu reported that negative consumption growth in 2020 is a foregone conclusion, with many agencies forecasting an average value of -3.8% year-on-year growth in total retail sales of consumer goods for the year.
Lin Caiyi stressed that as of November 2020, the gap between investment growth and consumption growth has widened to 7.4 percentage points. As it is difficult for consumption to take off significantly in the short term, China’s economy will still need to be supported by investment in 2021.
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