This is a headline party, the West is actually the European Union + the United States + Australia and New Zealand to, the U.S. market size accounted for almost forty percent of the Western countries, the first to the U.S. overtake it.
There are many economic data, but for this year (2021), the data I am most concerned about is whether China’s consumer market size can exceed that of the United States, and if not this year, next year can also exceed.
The U.S. domestic consumer market data can be downloaded at the link below. When they count the size of the market, one is based on the type of industry and one is based on sales and inventory, and generally speaking we use the former.
I made a table and the total size of the U.S. consumer market in 2020 is $6.215 trillion. Despite the new crown epidemic but because of the big money spreading in the U.S., it also increased by 4.9% in nominal terms compared to the previous year.
As you can see from the chart below, the largest portion of the U.S. consumer market was accounted for by sales of automobiles and gasoline.
Auto and parts sales of $1.244 trillion, or 20.02%, plus gasoline sales of $430.116 billion, or 6.92%, the sum of the two is 26.94%
It is clear that the United States is indeed the country on cars, but it also reminds us of the fact that Chinese companies clinging to the industrial opportunities presented by electric vehicles will bring how big the industrial space is, with a huge market of trillions of dollars in the United States alone. This market is much larger than the smartphone market and the chip market, and could also lead to a very large number of middle and high paying jobs.
The second largest consumer product, however, is food and beverage (including alcohol) store sales of $865,095 million, or 13.92 percent, and food service establishments spending $621,483 million, or 10.0 percent, for a combined 23.92 percent.
One driving and one eating and drinking add up to half of what Americans spend (50.86%).
The rest is not good statistics, such as specialized electronics and home appliance store sales of only $76.68 billion, but a large number of electronic products are sold in department stores as well as non-brick-and-mortar stores, from the table can not see the specific figures of electronic products.
The size of the U.S. domestic consumer market in 2020 is $6.215 trillion, so how much are we?
The first two years, 2019 and 2020, there was news that China’s consumer retail market size was expected to exceed that of the United States in that year, but in the end, it did not.
Two main factors have slowed down the process, one is the devaluation of the RMB due to the trade war, and the other is that the Chinese consumer market was more affected by last year’s epidemic than the US.
The total retail sales of consumer goods in China in 2020 is 39.1981 trillion RMB, down 3.9% from the previous year, which is 5.683 trillion USD according to the average exchange rate of 6.8974 published by the National Bureau of Statistics in 2020, 9.36% more than China in the US.
This year, due to the appreciation of the RMB and the fact that China’s consumption was down last year, with a low base, there is a possibility that consumption will exceed that of the U.S. this year, and if it does, this will be a historic figure.
In fact, China in the late 1950s, after the “golden decade” of industrialization at the beginning of the country, already had some people with some consumption power. If the Soviet Union could reform its rigid economic system, expand its light industry, and work closely with China, the huge population of China could become a huge market for the Soviet Union as it continues to develop, which would create a positive cycle of market demand and technology development.
Unfortunately, the Soviet Union focused on the heavy industry-driven arms race and space technology race on the industrial side, while breaking with China on the market side, cutting out a potentially large market that could be exploited to make huge profits for Soviet industry. A failed choice on both the supply side and the demand side.
In fact, China + Soviet Union + Eastern Europe, in terms of population is ahead of the Western world, the territory and natural resources are also similar, since China is the most critical factor lost, even if the Soviet Union in industrial transformation and development success, reform of its more rigid economic system, its potential market size is much smaller than the West and difficult to do, especially when China and the United States established diplomatic relations, and began to cooperate with the West in the economy, the world’s largest Western market + the world’s most promising growth market in China, the Soviet Union and the West’s race has been destined to end.
I used to read that China was actually the most crucial factor in winning or losing the Cold War, but I was actually not convinced, China was still quite weak compared to the U.S.S.R. during the Cold War, the people were quite poor, the amount of imports and exports was very small, the foreign economic influence was extremely low, and there was no decent navy, so it was good to keep their own security, which had the ability to influence the U.S.S.R. to win or lose the hegemony?
If the supply side and the market side of the potential ceiling are not as good as the West, then the Soviet Union is bound to lose. If the Soviet Union does not engage in hegemony, treats China as an equal and friendly partner, and makes full use of China’s labor force and market, there is at least some hope of achieving great things.
Mao Zedong said that politics is to make our people more and make the enemy less. Once China went out, the Soviet Union reduced the population of the Eastern camp by more than half and the area by almost 10 million square kilometers.
Originally the level of science and technology and economic level is not as good as the West, the loss of China is equal to the loss of the only some hope.
For China is actually similar, our country to join the WTO, a large reason is because the domestic consumer market was too small, the huge population of consumer potential has not been tapped out, in 2001 when China’s accession to the WTO, query the World Bank’s database, according to the current price of U.S. dollars, China’s total economic output is only 1.339 trillion U.S. dollars, accounting for the total global GDP of 33.431 trillion U.S. dollars at the time In other words, the total global economy outside of China amounted to almost 96%, while the total GDP of the United States in 2001 was 7.9 times that of China at $10.582 trillion.
The size of the U.S. consumer market alone is eight times the size of the Chinese market, plus the European market, the Japanese market, simply too vast. The size of the domestic market is too small, so China needs to pull economic growth through a large number of exports, the demand for the world market is very high, which is one of the reasons why WTO accession is so important.
This is also because of this accession to the WTO after the export surge, export surplus rapidly expanding, bringing the rapid increase in China’s economic output.
At the same time, the domestic consumer market is also growing rapidly along with the economic development, with the change of time, the power of the domestic mega market began to gradually appear, the following chart is the amount of China’s exports from 2001 to 2020, from $ 266.098 billion in 2001 to 259.0387 billion in 2020, 2020 is 2001’s 9.735 times more than in 2001.
But from the graph, you can easily see that after the export amount exceeded two trillion U.S. dollars in 2012, exports have hit a bottleneck, and the growth rate has slowed down greatly, which shows that foreign markets are not infinitely large for you to do, others have opened their markets to you, you need to come up with something in exchange.
Then look at the growth of China’s total retail sales of consumer goods, the total amount in 2001 was 375.952 billion yuan, and in 2020 was 3,919.81 billion yuan, 2020 is 10.43 times of 2001, and it is very important that the total retail sales of consumer goods is growing continuously, and did not meet the bottleneck of export growth after 2012 like exports, which also fully illustrates the This fully illustrates the importance of the domestic market.
Why did exports stop growing rapidly after a certain volume?
I think the biggest reason is that the overall growth rate of foreign economies is not as fast as that of domestic ones, so after China’s share of global exports reaches a certain level, the growth rate is bound to slow down considerably, and the other is that with the development of the domestic economy, labor costs will rise, and some enterprises will shift their production capacity to other developing countries such as Vietnam, Cambodia, India, etc.
For large countries like the United States and China, the domestic market will eventually be more advantageous compared to the amount of exports, which is also a source of great power of large countries, super large-scale domestic market, not only means that it can feed the complete industrial chain, with a very high economic security in the outbreak of international conflicts, but also means that other economies, especially small and medium-sized economies have to rely on the large market of large countries, otherwise it will not be able to maintain economic growth or maintain its current GDP per capita, which can greatly enhance the discourse of large countries, which in turn are much less dependent on exports.
We can look at the data of the United States and China, and check the amount of goods import and export trade of the United States for all years at the following link
We can see that the historical peak of U.S. exports of goods is 2018, at $1.67695 trillion, and the U.S. exports of goods in 2020 is $1.435 trillion, which is obviously not comparable with the domestic market of $6.251 trillion, and from the average ratio of the past few years, the ratio of export market and domestic consumer market size is about 1:4, which shows that for U.S. enterprises, the domestic market is the real core.
For China is also the same, in 2020 China’s exports worth 25906.5 billion U.S. dollars, with the domestic market of 5.683 trillion U.S. dollars, is almost 1:2 relationship, and obviously because China is the world’s fastest growing major economy, the Chinese market accounted for the proportion of the global expansion, so the future growth of the domestic market size will be faster than exports, so for Chinese companies Therefore, for Chinese companies, the domestic market will be the main source of revenue for Chinese companies.
We are in the face of the U.S. semiconductor technology blockade, in China’s semiconductor technology relative to the United States is at a disadvantage, China’s huge domestic market size has played a very good support role, a typical example is the 2018 since a large number of semiconductor industry chain companies in the domestic A-share listing financing, financing from the domestic market, sought by institutions and stockholders, and market value generally soared, on the other hand, various capital also Generally optimistic about the size of China’s market can independently support the realization of the de-embellished industry chain, the Chinese market can reach tens of billions or even hundreds of billions of dollars a year for the purchase of de-embellished chips, so capital has also invested in a variety of start-ups as well as leading chip industry chain companies.
If this year (2021) China’s consumer market exceeded the United States to become the world’s largest, and continue to expand the scale of the U.S. market advantage, for China’s industrial development is a milestone, which means that Chinese companies are becoming less dependent on the U.S. market, while the opposite U.S. companies if they lose the Chinese market, the impact on their own will increase, because the market is the source of the company’s wealth.
Capital and technology have always been the two engines to achieve economic development and national wealth, and capital is in fact the ultimate source of the market, the larger the market, the more advantageous, so it can also be said that the market and technology are the two engines, the two driving forces and promote each other.
The more advanced the technology, it can promote the national per capita income, expand the size of the domestic market, the expansion of the domestic market, it can provide more business income for the national enterprises to strengthen their comprehensive strength.
In the long run, as the domestic market size of major countries is much larger than the export market size, so who has a larger domestic market size, who is more advantageous in the competition between major countries.
Since domestic enterprises have an inherent advantage in accessing the domestic market, a country with a large domestic market must be the most beneficial to its own enterprises.
Industrialization and globalization have made China’s technology level approaching that of the U.S., and also greatly released the huge energy brought by 1.4 billion people, turning the surplus labor force with low consumption power in the agricultural era into a huge market resource with high consumption power in the industrial era. 1 billion people in India and Africa are not as large as 300 million people in the U.S. in terms of local market size because of the lack of industrialization, but However, China, which has industrialized with a population of 1 billion, will gradually surpass the United States with a population of 300 million in terms of the size of its local market, forming a super engine for the development of its enterprises.
Of course, industrialization will also lead to a decrease in population, so the population accumulated during the agricultural era will become a decreasing, valuable and non-renewable resource, so China is adjusting its population policy to the changing times.
Of course, back to the main theme of this article, the data I am most concerned about this year is whether the size of the domestic consumer market can exceed that of the United States, if it is really achieved, in fact, the shock to global enterprises will be very big, the United States want to engage in blockade will be more and more difficult, because not only to third countries against the United States sanctions policy will be louder, U.S. companies themselves because of the sanctions resulting in greater losses will also be.
And in the long run, because the U.S. market accounts for 40%-50% of the market size of Western countries, so if we exceed the United States, and then continue to maintain rapid growth, it is possible that in 10-20 years China’s market size exceeds the sum of the entire West, at that time, the huge single market will have an absolute advantage over the Western countries, so to speak, is a historical inflection point.
China has already mastered the world’s largest manufacturing capacity, the next step and then master the world’s largest market, that will further occupy the initiative in the long-term competition with the United States.
In 2018, the United States began a trade war and technology war, which caused a lot of pressure on our country, and caused a certain degree of impact on the psychology of our nationals, remember how many people jumped out of the country in 2018, either saying that China is too high-profile, that is, Chinese companies are not honest, either that is to say that severely criticize my country is not so powerful, feeling as if China has lost the war. In fact, China and the United States, who is the strategic offensive side, who is the strategic defensive side, from the supply side of the manufacturing output, and the demand side of the market size of the change, are very obvious, unless one day the two data of this and that has changed.
Finally, for the long-term growth of the domestic demand market, one of the most delightful things recently, is that three children finally opened up, which is good for the long-term growth of China’s domestic demand market, which also shows that China’s ability to adjust is still there, I hope that the follow-up support measures will be introduced as soon as possible to reduce the burden of parenting.
But the balanced development of the whole country is always a big challenge for us, and it is very important to achieve a balanced development of the whole country for the long-term growth of the domestic demand market size.
Because practice has proven time and again that the more concentrated the wealth, the more unbalanced the development, the more detrimental to the overall growth of the consumer market, the same job opportunity with an annual salary of 500,000 yuan, in the north and in the second and third tier is not the same contribution to the growth of consumption.
In the first-tier cities with an annual salary of 500,000, due to higher housing prices, the proportion of expenditure flowing to real estate is higher, while if in the mainland cities, housing expenditure is reduced, it is more conducive to residents to spend more money on daily consumption, so to achieve the flow of jobs from first-tier cities to second- and third-tier cities, not only to achieve balanced development, but also more conducive to the growth of the size of the national consumer market, the topic will be talked about afterwards.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/if-the-size-of-chinas-domestic-market-exceeds-that-of-the-west/
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