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Upgraded products saw a sales boom while the services industry continued to pick up momentum last month as domestic consumer spending injected impetus into China's economic recovery in the post-COVID period.

Retail sales of commodities increased by 10.5 percent year-on-year in May, among which the retail sales of communicators , gold and silver jewelry, and sports and entertainment products above a designated size increased by 27.4 percent, 24.4 percent, and 14.3 percent respectively on a yearly basis, data from China's Ministry of Commerce showed.

"The ministry has guided various localities to carry out various vehicle purchase promotional activities, in addition to implementing measures to activate the second-hand car market, and coordinate with relevant departments to introduce support for new-energy vehicles (NEVs) in rural parts of the country," head of the ministry's department of market operation and consumption promotion said on Saturday.

Retail sales of autos above unit designated size jumped 24.2 percent last month year-on-year.

The services industry recorded strong performance last month with major holidays injecting impetus into offline consumption.

For example, the catering sector nationwide saw revenues up 35.1 percent in May on a yearly basis. In the January-May period, the cumulative year-on-year increase came in at 22.6 percent, accounting for 10.6 percent of the total retail sales of social consumer goods.

The May Day holidays boosted the Chinese consumer market with a total of 274 million domestic trips made and domestic tourism revenue reaching 148 billion yuan ($20.8 billion), in both cases surpassing 2019 pre-COVID levels, according to data released by the Ministry of Culture and Tourism.

The recovery of bricks and mortar spending also accelerated, as physical retail continued to surge. In May, department stores, specialty stores and supermarkets monitored by the Ministry of Commerce saw sales rise by 14.5 percent, 13.3 percent and 5.8 percent year-on-year respectively.

The upcoming Dragon Boat holidays are expected to act as another catalyst to bolster domestic demand and consumption, Liu Ying, a research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times.

The second quarter is expected to see a stronger economic rebound compared with the first quarter, when economic indicators exceeded expectations, Liu said.

GDP grew by 4.5 percent in the first quarter from a year earlier with consumption contributing around two-thirds of total economic output.

Retail spending, a major driving force of domestic economy, is playing a stronger role in Chinese economic growth, according to latest data released by the National Bureau of Statistics (NBS) on Thursday.

In the first five months of the year, total consumer retail spending hit 18.76 trillion yuan, up 9.3 percent from a year ago, accelerating 0.8 percentage points compared with that of the January-April period and 3.5 percentage points compared with that of the first quarter, NBS data revealed.

"Since the beginning of this year, China's consumption potential has been gradually released, and its role in stimulating economic growth is obviously becoming more prominent," Fu Linghui, a spokesperson from the NBS, told a press conference on Thursday.

The official also acknowledged some "constraint factors" that are dragging certain aspects of domestic consumption.

"In the next stage, it is necessary to continue promoting stable economic growth, employment and prices, implement various policies to promote consumption, actively restore and expand traditional consumption, and accelerate the cultivation of new types of consumption," Fu noted.

Global Times