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Chengdu-Chongqing Economic Circle: Consumer Market and Social Development
20 June 2022
C H Poon
The Chengdu-Chongqing region is a promising consumer market full of potential. It has a population of more than 96 million, and has been showing a higher growth rate than the national average in recent years in terms of GDP, household income and total retail sales of consumer goods. Businesses looking to take advantage of the opportunities presented by the upgrade of the local consumer market should find new impetus for corporate growth.
According to the Master Plan for the Construction of the Chengdu-Chongqing Economic Circle (Master Plan), the Chengdu-Chongqing region will be developed as a destination for international consumption as well as a beautiful high-quality city cluster that is pleasant to live in. Given that the development of a consumer market is closely related to people’s livelihoods, regions with maturing infrastructures that support people’s livelihoods can stimulate a rise in consumer spending. This article will explain some of the major initiatives taken in the Chengdu-Chongqing Economic Circle to promote the consumer market and social development. The aim is to help businesses formulate strategies for tapping the local market.
Improving public services
Proposals in the Master Plan include the promotion of collaboration in education development, the sharing of educational, cultural and sport resources, and co-operation in public health as well as medical and elderly services within the Economic Circle. The aim is to bridge the gaps in the quality of social facilities among the different cities in the region. Measures include: setting up a number of vocational education bases, promoting the provision of medical facilities in different cities by Grade-A tertiary hospitals from the central cities, developing online medical services, and building up a system to monitor and analyse demographic development in order to tackle the problems caused by an aging population. One of the principal development objectives of the Economic Circle is to drive for quality development. The upgrading of the social facilities and related service standards of medium-sized cities and county towns will help to retain more local residents and attract migration from other provinces and cities to the Chengdu-Chongqing region.
Meanwhile, local authorities will improve the quality of public services. If residents within the Economic Circle are provided with unified public services of high quality, their mobility between the different cities of the Economic Circle should be correspondingly enhanced, which will in turn drive the economic development of these cities. The Master Plan sets out a number of measures, including advancing the mutual recognition of pension eligibility verification within the Economic Circle, promoting the direct settlement of cross-border non-local outpatient and emergency services within the region, as well as unifing treatment and policy regarding work-related injury and insurance terms.
When it comes to policy on household registration, the Economic Circle is likely to see an overall relaxation of requirements. Chongqing’s urban districts and Chengdu will speed up the removal of settlement restrictions on key demographic groups, including rural migrants who have had stable local employment and residency for more than three years. Within the city clusters, local authorities will push for measures to facilitate the migration of household registers, including intra-city mutual recognition of the cumulative years of residency for household registration as well as the mutual application for and recognition of residence permits.
The development of the Chengdu metropolitan area should be noted in respect of the drive to upgrade public service quality. In recent years, the cities of Chengdu, Deyang, Ziyang and Meishan have actively promoted the integrated development of their public services. Since 2021, for instance, residents of these four cities have been able to use one-stop service for the transfer and continuation of their basic pension insurance. In the past, people moving from one city to another for employment had to first terminate their insurance subscription in the original city and then enroll in another medical insurance for employees in the new city. Under the new policy, residents of these four cities can complete their insurance enrolment in any one of them.
The Chengdu metropolitan area has also implemented the mutual recognition and use of the electronic health card or code for accessing medical services. Residents can now receive medical treatment in different hospitals in any of the four cities without the need to bring along consultation cards from any specific hospital.
The Chengdu metropolitan area also acts as a means of improving industrial collaboration. While Chengdu is linking up with Deyang to build up an equipment production base, it will also work with Meishan to develop high-tech industries through the Tianfu New Area and set up an airport economic industrial belt jointly with Ziyang.
The Chengdu metropolitan area (Source: Steering group office for the promotion of Chengdu-Deyang-Meishan-Ziyang integrated development)
International consumption centres
With its rapid economic development, the Chengdu-Chongqing region has become one of the principal consumption centres of China. According to the Master Plan, the Chengdu-Chongqing Economic Circle will be developed into a destination for international consumption with local characteristics. Listed below is the consumption data for the Chengdu-Chongqing region in 2021, which should provide a clear picture of the development potential of this consumer market.
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National |
Chongqing |
Chengdu |
Sichuan Province |
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Total retail sales of consumer goods (in RMB billion) (Year-on-year nominal growth rate) |
44,082 (12.5%) |
1,397 (18.5%) |
925 (14.0%) |
2,413 (15.9%) |
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Per capita disposable income of urban households (in RMB) (Year-on-year nominal growth rate) |
47,412 (8.2%) |
43,502 (8.7%) |
52,633 (8.3%) |
41,444 (8.3%) |
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Per capita consumption expenditure of urban households (in RMB) (Year-on-year nominal growth rate) |
30,307 (12.2%) |
29,850 (12.8%) |
31,581 (9.9%) |
26,971 (7.3%) |
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Source: National Bureau of Statistics, Chongqing Municipal Bureau of Statistics, Chengdu Municipal Bureau of Statistics and Sichuan Provincial Bureau of Statistics | ||||
The above data highlights a number of characteristics. First, following the blow dealt to the national economy by the Covid-19 pandemic in 2020, the consumer market of the Chengdu-Chongqing region bounced back in 2021 at a rate higher than the national average. Second, except for Chengdu city, the per capita disposable income of urban households in the Chengdu-Chongqing region on the whole exhibits a strong impetus for growth, even though it is still lower than the national average. In particular, the income level of Chongqing households is catching up with the national average. In terms of consumption expenditure in 2021, the urban households of Chongqing and Chengdu are on a par with the national level while other Sichuan cities are below. The efforts of the local authorities to promote the industrial development of the Chengdu-Chongqing region and build up its cities into international consumption centres will help to boost the income levels and consumption demand of local residents.
Chongqing People’s Liberation Monument Central Business District. (Source: Publicity Department of CCP Yuzhong District Committee)
In building up its consumer market, the Chengdu-Chongqing Economic Circle will look to develop by segments with existing systems optimised. Chongqing’s urban districts and Chengdu will try to create consumer brands with local features, developing the cities as international consumption centres. Fuling District and Hechuan District of Chongqing, together with Leshan City, Ya’an City and Nanchong City of Sichuan Province, will develop humanistic, leisure, resort, and health and wellness industries to create a “Chengdu-Chongqing backyard” brand. Meanwhile, Wanzhou District, Jiangjin District and Tongliang District of Chongqing - as well as Yibin City, Luzhou City, Zigong City and Neijiang City in Sichuan Province - will form a specialty consumption hub highlighting their traditional Chinese baijiu (white liquor), traditional crafts, folk festivals and natural heritage. The authorities of the Chengdu-Chongqing region will improve existing systems by expanding the scope of mobile payments, building up public service platforms for key products such as food and pharmaceuticals, and encouraging physical stores to make voluntary commitments regarding the no-reason return of goods.
The project of building international consumption centre cities is already underway in the Economic Circle. In July 2021, the State Council gave approval for the cities of Chongqing, Shanghai, Beijing, Guangzhou and Tianjin to take the lead in building into international consumption centre cities. In February 2022, the Chongqing municipal government released a raft of policies concerning the construction of international consumption centre cities, with the stated aim of setting up a core commercial circle with international, green, intelligent and humanistic elements. Businesses with outstanding retail sales performance or flagship stores set up in the city centre, those promoting intelligent transformation, and those running international logistics distribution centres in Chongqing will be provided with funding incentives. With Chengdu also showing great potential as an international consumption centre city, it’s clear that Chongqing’s urban districts and Chengdu will perform the role as the connection to the international consumer market, while other cities in the Economic Circle will focus on expanding the domestic consumer market.
Consumer market characteristics
In recent years, the consumer markets of Chengdu and Chongqing’s urban districts have seen the following development trends:
1. Urban renewal
When revitalising these old buildings, Chengdu and Chongqing not only take account of their commercial value, but also use the opportunity to update the appearance of the community. One well-received urban renewal project is Chengdu’s Mengzhuiwan area, which is located in the city’s Chenghua District. It was formerly an old city block which was largely residential. Since it was revitalised with the addition of many cultural elements in 2019, the area has become a popular leisure destination for Chengdu residents and one of the local centres for arts and culture.
Both Chengdu and Chongqing have a long history and culture. As a result, there are many old buildings in the two cities’ urban districts, including some factories constructed in the last century. During the process of upgrade and transformation, both cities have converted many old buildings into commercial premises. For example, the Kuanzhai Alley in Chengdu’s Qingyang District, also known as “Wide and Narrow Alley”, which goes back some 300 years, was revitalised in the 2000s and has become one of the city’s distinctive pedestrian malls, attracting many mid-to-high-end consumer brands.
2. Night-time economy
The development of a night-time economy can expand the size of the consumer market and raise the level of consumption. The rapid development of the internet has allowed pictures of beautiful urban night scenery to be widely circulated. These can be used to promote the image of a city. Both Chongqing and Chengdu have fantastic night scenery, including Chongqing’s Hongyadong folk custom scene area which is full of architectural characteristics and is a very popular tourist attraction. In a report published by China Financial Weekly and Liaowang Institute of Xinhua New Agency on the most influential night-time economy cities, Chongqing and Chengdu have been named in the top 10 three years in a row, with Chongqing ranking first throughout.
The Master Plan looks to develop the night-time economy of the region, proposing that night-time economy products - including night markets, night fairs, night performances and night tours - be enriched, a number of night-time cultural and tourist consumption clusters be built up, and familiar terms for night-time economy products such as the “two-river tour” and “street-alley tour” be further highlighted. Once the domestic tourism market bounces back after the Covid-19 pandemic recedes, it’s expected that the two cities will increase the supply of night-time economy products in order to reinforce the position of the Chengdu-Chongqing Economic Circle in the national market of the night-time economy.
3. First-store economy and experiential consumption
First stores mostly attract customers through experiential consumption or via their locations at shopping malls, which can provide customers with unique consumption experiences. Experiential consumption refers to the additional sensory experience offered to customers during the consumption process. In recent years, many of the new retail outlets in Chongqing and Chengdu (including first stores set up by new brands, flagship stores of existing brands and newly opened shopping malls) have been putting a great emphasis on their customers’ shopping experience. One example of this is The Ring, solely developed by a Hong Kong company, which opened in Chongqing in 2021. The forest-themed retail development features an indoor botanical garden.
“First store” refers to the earliest store set up by a new brand that has never run a physical outlet before, or the new concept store or flagship store set up by an existing brand. Focusing on retail innovation, the size of the first-store economy can reflect how attractive a city is for new brands. According to a 2021 report by DataQuest China on the development of China’s first-store economy, Chengdu has drawn in more than 1,100 first stores during the period 2019-2021 - the largest number in China after Shanghai and Beijing. Although the catering industry makes up a larger share of first stores in Chengdu, the percentage of first stores that come from the retail sector is going up, indicating that the spending power of Chengdu consumers is increasingly being recognised by retail enterprises.
4. New business districts
The business districts of Chongqing city centre and Chengdu have expanded in recent years, mainly to support the new central business districts being developed nearby. That is why many shopping malls are coming into operation on Chengdu’s Jiaozi Avenue and Chongqing’s Central Park Area. These shopping malls mainly serve the people working in the vicinity. Shopping malls that have already been opened include Longfor Central Park, Chongqing Yubei Wuyue Plaza, Chengdu in99 and Chengdu Ufun.
Chengdu’s Mengzhuiwan area. (Source: HKTDC Chengdu Office)
Night view of Chongqing’s Hongyadong and Jialing River. (Source: HKTDC Chongqing Office)
Takeaways for Hong Kong businesses
The development of the Chengdu-Chongqing Economic Circle as an international consumption destination with local features is a systematic project. The Master Plan shows that central government and the local authorities are pushing for a balanced, comprehensive development in the Economic Circle by strengthening local industries, upgrading the quality of public services, implementing policies that cater for local conditions, and optimising existing systems. They aim to nurture and increase the number of middle-income households in the region, in order to raise and upgrade consumption. According to the 14th Five-Year Plan, China is expected to build up a strong domestic market and continue to expand its opening-up. The aim of building up the Economic Circle as an international consumption destination is not only to connect with overseas quality brands through Chengdu and Chongqing’s urban districts, but also to enhance the region’s contribution to the national economy.
The development of the Economic Circle presents Hong Kong businesses with extensive opportunities. With the enhancement of spending power in the Chengdu-Chongqing region, consumers will generate greater demand for mid-to-high-end goods and services, providing Hong Kong merchandise trading and service enterprises with the opportunity to develop the market. With the Chengdu-Chongqing region’s focus on the first-store economy, Hong Kong companies should regard the region as a strategic location for setting up first offline brand outlets, launching new products and experimenting with new retail concepts on the mainland. The region's ongoing drive for urban renewal will also present Hong Kong companies with more choices of location when entering the local consumer market. Development of the Chengdu-Chongqing Economic Circle is a comprehensive long-term plan that merits the attention of Hong Kong companies and calls for the formulation of long-term operational strategies.
- Mainland China
