Sunday, April 8, 2018

MOFCOM: Peoples Republic of Shoppers

The blizzard of tariffs and trade rhetoric is overshadowing China's "new concept" of opening its economy to give its consumers access to better quality products. China's Commerce Minister Zhong Shan finished off a March 11, 2018 press conference dominated by questions about trade conflicts with a discourse on how MOFCOM plans to push ahead with plans to "give city and rural people more abundant choices, much more convenient services, and a more comfortable experience" by upgrading shopping opportunities for Chinese consumers and giving them access to imported high quality products. 

The initiative to shift China's drivers of growth from investment and exports to consumer demand was introduced by Xi Jinping at the October 2017 "19th Party Congress." The idea has been dressed up with the awkward Maoist slogan "Change in the Main Social Contradictions," and propaganda organs have explained how meeting consumer demands for quality and comfort fit neatly into China's historical progress toward a communist society.

Minister Zhong explained that 400 million of China's 1.4 billion people have entered the "middle class," and the main problem ("contradiction") has shifted to satisfying peoples' desire for a better life [from the 1950s-era problem of developing industry and modernizing agriculture in a "backward" country, according to the Peoples Daily]. Zhong cited the estimated $200-billion of overseas shopping done by Chinese citizens as evidence that China's economy does not supply the high quality products its consumers want. "Foreign purchases reflect the insufficient supply of quality products in the country and their high price," Minister Zhong said.

MOFCOM will work on initiatives to innovate in product marketing and distribution, expand consumption, and increase effective supply in three areas of work.

First, establish domestic platforms for consumption. Pedestrian malls for shopping will be developed to make cities more livable and to serve as a "beautiful calling card" for cities. Community shopping networks of convenience stores, food markets and other outlets should provide a commercial network of daily shopping within 15 minutes of residences. In the countryside, a network of market towns with shops and services will be part of a makeover of the countryside. E-commerce will be greatly developed, with integration of "online" and "offline" commerce.

Second, promote consumption and reduce costs to consumers by broadening access to the market, reducing tariffs on imported cars and some daily consumer products, opening the market to telecommunications, medical, education, elderly care services.

Third, improve consumer confidence in products they buy through rectifications and consolidation of the Internet and rural markets and by establishing a traceability system for agricultural products.

Tariffs announced last week on items such as imported pork, cherries, apples, grapes, plums, cranberries, pistachios, almonds, and macadamia nuts go in the opposite direction by cutting off Chinese consumers from high quality products.

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