BEIJING (Reuters) – Domestic demand in China is accelerating as increasingly wary consumers choose to rent items from cameras to handbags rather than buy them, the official People's Daily newspaper said, although government data tells a different story.
The newspaper said in an optimistic commentary on Monday that the rise of the “rent, not buy” model has injected new momentum into the world’s second-largest economy, indicating a trend that provides companies with a “new perspective.”
With domestic demand in China weak this year, reluctance to spend has led to increased rentals, with online platforms allowing consumers to rent a drone, for example, for 1 yuan (14 cents) per day, against a typical cost of more than 5,000 yuan. $685).
For 35 yuan, one can get a “99% new” Louis Vuitton handbag, a listing on a popular app showed.
The newspaper said that new forms of demand lead to the emergence of new forms of consumption with “tremendous” potential.
State media typically talk about China's consumption outlook even when government data point to a more realistic trend.
Statistics show that retail sales of consumer goods grew just 3.5% in the January-November period compared to the previous year, with the low base effect that helped boost post-pandemic retail sales in 2023 fading by 7.2%.
To stimulate consumption, China launched a trade-in scheme this year that offers subsidies for purchases when consumers trade in old appliances, bicycles and even cars.
Officials say sales have exceeded 1 trillion yuan ($137 billion) this year under the program, “unlocking” a wave of consumption not yet visible in government data.
China has relied heavily on manufacturing and exports this year, with household demand entering a deep recession, as a years-long real estate slump has led to a decline in consumer wealth and confidence.
Economists have urged Beijing to take a more consumer-focused turn in its policies.
At a meeting this month, senior officials of the ruling Communist Party said China should “vigorously” boost consumption next year and seek to expand domestic demand “in all directions.”
“With the development of the economy and society (in China), the trend towards raising the level of consumption has become clear,” the People's Daily said. “But both are not one step ahead.”
(This story has been reworded to drop the extraneous word “be” in paragraph 9)
