State of the Market
Beijing. Per-capita disposable income of Beijing’s urban residents reached 13,882.6 yuan in 2003, rising 11.4 percent year on year, according to data from the Beijing Bureau of Statistics (BBS).
Among the five metropolises—Beijing, Shanghai, Tianjin, Chongqing and Guangzhou, Beijing ranked third in terms of per-capita disposable income and the fourth in terms of its growth rate. (see graph 1)
A statistical report from BBS revealed the factors that boosted the income growth. Continual growth of the economy in 2003, which brought the increase of enterprise profits and employee’s salary, was the basic factor of the income growth.
At the end of last year, the Beijing Municipal Government raised the salaries and subsidies of employees in government offices, administrative departments and public institutions.
Moreover, during the SARS (severe acute respiratory syndrome) epidemic period, the Beijing Municipal Government provided subsidies to employees in sectors suffering severely from SARS and to those who fought against the epidemic on the front line.
In 2003, per-capita consumer spending of Beijing’s urban residents equaled 11,123.8 yuan, up 8.2 percent year on year.
Changes happened in the consumption pattern of Beijing’s urban residents. Expenditure on food, medical care, residence, culture and recreation dropped both in terms of growth rate and proportion in the total expenditure, while spending on cars, communications, cosmetics and big-ticket goods increased rapidly, which also impelled the upturn of total demand.
Decline in the proportion of food spending, drop in medical spending but rise in health product spending all indicated climb in the quality of residents’ consumption. Meanwhile, per-capita tourist spending hit 2,693 yuan in 2003, up 23-fold year on year and the number of tourists rose 60 percent. Spending on culture and education also resumed growth.
The consumption concept of Beijing residents changed with their income growth. Consumers gradually preferred non-consumption spending, including spending in buying or building houses, per-capita transfer expenditure, per-capita expenditure on social security and non-saving insurance expenditure like buying personal accidental insurance and illness insurance.
In 2003, per-capita non-consumption spending was 2,639 yuan, with a year-on-year increase of 34.4 percent, 22.5 percentage points higher than the previous year. Non-consumption spending accounted for 19.2 percent of the total spending, 3.2 percentage points higher than in 2002.
Yangtze River Delta. The Yangtze River Delta, composed of Shanghai, eight cities in Jiangsu Province (Nanjing, Suzhou, Wuxi, Changzhou, Zhenjiang, Nantong, Yangzhou and Taizhou) and six cities in Zhejiang Province (Hangzhou, Ningbo, Jiaxing, Huzhou, Shaoxing and Zhoushan), saw an overall increase in per-capita disposable income of urban residents in 2003, with the year-on-year growth rate 9-17 percent, according to data from the Shanghai Bureau of Statistics (SBS).
SBS data revealed that the Engle Coefficient of the 15 cities kept dropping in 2003, ranging from 35 percent to 43 percent.
The Engle Coefficient is the proportion of spending on food in the total consumer spending. It is an index used worldwide, which indicates residents’ standard of living.
According to the standard set by the Food and Agriculture Organization of the United Nations, living standard of a country or a region can be considered as “rich” when its Engle Coefficient is below 40 percent.
Statistics from SBS showed that within the delta, there are 10 cities whose Engle Coefficient is below 40 percent, which means that more than 60 percent of the residents in the region live a rich life.
Take Shanghai as an example. In 2003, per-capita spending on food of Shanghai’s urban residents was 4,103 yuan, with the Engle Coefficient being 37.2 percent, 2.2 percentage points lower than in 2002.
While reducing spending on food, their spending on clothing increased more than 20 percent last year to reach 751 yuan, accounting for 6.8 percent of the total consumer spending.
Spending on communications, education and recreation also increased in 2003. (see graph 2)
In other cities, non-food consumption grew even more rapidly.
Per-capita expenditure on transport and communications in Ningbo equaled 1,398 yuan last year, ranking first in the region. In terms of growth rate of expenditure on transport and communications, the top three cities were Nantong (78.6 percent), Suzhou (72.8 percent) and Ningbo (65.9 percent).
Zhenjiang underwent the fastest growth in expenditure on education, culture and recreation, with per-capita spending up 38.1 percent.
Again Shanghai led the top five cities in residence expenditure, with per-capita residence spending being 1,280 yuan. The other four cities were all in Zhejiang Province, namely Shaoxing (1,263 yuan), Zhoushan (1,107 yuan), Ningbo (1,058 yuan) and Hangzhou (1,038 yuan).
Shenzhen. Per-capita disposable income of Shenzhen’s urban residents continued to climb in 2003, hitting 25,935.84 yuan, up 4 percent year on year, according to data from the Shenzhen Bureau of Statistics.
Stable increase of the income raised the confidence of Shenzhen residents in consumption. In 2003, per-capita consumer spending was 19,960.32 yuan, rising 5.5 percent.
Food, transport and communications, and education, cultural and recreation services were still the main expenditures of Shenzhen residents. Spending on education and medical care increased fast because residents attached more importance to investment in education and health care. (see graph 3)
Fluctuations in transport and residence were the biggest. With the increase of resident income and decrease of car prices, private cars have become popular among consumers in Shenzhen, making expenditure on transport grow the fastest.
Compared with the enthusiasm in buying cars, Shenzhen residents have reduced their expenditure on residence. Their spending on home decoration even dropped 33 percent.
With the increase of per-capita disposable income, the financial concept of Shenzhen residents changed. They began to withdraw from banks for investment purposes. Last year, the money withdrawn was 1,221 yuan more than the money deposited.
In addition, spending on saving insurance increased 34.5 percent to be 517.56 yuan.
Farmers’ income. In 2003, farmers’ net income was 2,622 yuan per capita, 146 yuan more than in 2002, with a year-on-year increase of 4.3 percent, according to Chen Xiwen, an official from the Office for the Central Leading Group on Economic and Financial Affairs.
Chen pointed out several factors that impelled the growth of farmers’ income. Restructuring of agriculture and rural production was still in progress last year. Rural tax reform was carried out all over the country. Forestry, stockbreeding, fishery and township enterprises all developed steadily.
Rural labor working in cities has become an important factor of farmers’ income growth. From 2000 to 2002, about 48 percent of the increased income is from rural labor working in cities, according to Chen. In 2003, the number of rural labor working in cities continued to increase, reaching 99 million, 5 million more than the previous year.
Compiled by YU SHUJUN