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By Yin Lei

China still has significant growth potential in its domestic consumer goods market as its huge population spends more in the future, said an entrepreneur at the 2018 China Development Forum Special Session on Monday.

For the first half of 2018, the total sales of retail goods in China experienced a sluggish 7.7 percent real growth, the slowest pace ever in the past 23 years.

Despite this recent slump, China’s consumer goods market still has plenty of untapped potential, said Zong Qinghou, chairman of the Hangzhou Wahaha Group, China’s biggest beverage company.

Probing into the reason for this slowdown, Zong pointed to a shift in the consumption preferences of the middle-income group in China.

The middle-income group, comprising 300 million to 400 million people, are already leading an affluent life and don’t see much consumption choices at home. They have begun to transfer more of their spending overseas on goods and activities like travelling and cultural products.

On the other hand, he saw tremendous consumption potential in those with an earning below the middle-income level, which are numbered at over one billion people, and put forward some proposals for tapping this potential.

Boosting their income should be a priority. Zong advised cuts to taxes on companies, individual income and social security premiums so that businesses can pay more to their employees and wage-earners can pocket more of their income. In addition, the government needs to divert more resources from infrastructure development to people’s livelihood.

Freeing up their spending power is also crucial, he pointed out. Education and healthcare services should shift from focusing on commercial operations to being non-profit public causes. More affordable houses can be built to meet the demand for housing and thus free up more spending that could go to consumer goods.