China wants to boost domestic consumption, but that may be easier said than done for makers of plastic Christmas trees and other export goods
By Trefor Moss Close Trefor Moss Sept. 27, 2020 10:00 am ET YIWU, China—Chinese makers of goods for export are seeking to turn inwards and sell domestically, a pivot considered key to making the world’s second-largest economy more self-sufficient.
Reorienting China’s formidable export machine to sell more domestically is easier said than done, say merchants in Yiwu, a city of 1.2 million people whose Yiwu International Trade City, a vast emporium of more than 75,000 wholesale stores, contributed about 2% of China’s $2.5 trillion in exports last year.
“We’ve spent decades learning how to operate smoothly in overseas markets,” said Ms. Zhang, hinting at the enormity of trying to replicate those relationships back home. “Shifting to the domestic market won’t be easy. The journey will be long.” But exports of many other commodities suffered: Toys were down 9% in the same period, ceramics fell 13%, and clothing dropped 17%.
Liu Jufang, who makes and sells plastic Christmas trees, said foreign orders only started arriving in July of this year, two months later than a typical year. Demand is picking up, but “it’s too late for us to rush production to take all the orders,” Ms. Liu said. This year’s sales are on course to be down by one-fifth.
There is potential to sell more domestically, provided ordinary consumers can be persuaded to open their wallets. China’s total household consumption in 2018 was $5.4 trillion, according to the World Bank. That was three times higher than the 2008 level but still far behind the U.S.’s $14.6 trillion in 2018. While consumption as a share of gross domestic product has risen over time in the U.S., reaching 68% in 2018, China’s has steadily declined to just 39%.
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