A shopping mall in Baoding, Hebei province. (File photo/Xinhua)
One consequence of the Chinese government's measures to cool the residential property sector and transition the economy to greater domestic consumption-led growth is that commercial property investments, particularly shopping malls, have grown rapidly in recent years. It is expected that by 2015, the number of shopping malls in China will exceed 4,000, with second- and third-tier cities seeing the greatest growth.
According to a joint report by Deloitte and the China Chain Store and Franchise Association, as of September 2012 construction space marked for malls to be completed by 2015 hit 600 million square meters. When all are complete, the number of shopping centers in the nation will be greater than 4,000.
The report says that since 2008, investment in commercial properties in China has been growing at 15% annually, but growth jumped to 30% after the launch of measures in 2010 designed to put downward pressure on residential property prices.
Municipal governments have played a major role in investment in commercial properties; they are viewed as a sure way to boost tax income, lift employment and improve a city's image in addition to fattening municipal treasuries through the transfer of public land.
Following the outbreak of the global financial crisis in 2009, the central government has introduced policies to accelerate the economy's reorientation to domestic consumption and away from the reliance on low-wage manufacturing and exports so integral to its 30 years of rapid economic growth. Among the incentives to encourage private consumption: encouraging the purchase of cars and home electrical goods in rural areas and by raising the wages of the lowest paid workers by 13%.
Large Taiwanese retail names including supermarket RT-Mart, Dennis Group, Grand Ocean Retail and electronics chain Buynow, have directly benefited from the growth in domestic Chinese consumption.
Sun Art Retail Group, the parent firm of RT-Mart—China's leading retail outlet—for instance in first half of 2012 earned 1.37 billion yuan (US$220 million) in profits, up 75% from 2011, rocketing its share price 20% in 2012.
The report notes that large shopping malls began spreading to second and third-tier cities in 2009. Total floor space of centers under construction in Tianjin and Shenyang both top 2 million sq m and the number of centers in Chengdu alone has exceeded 100.
Due the popularity of online shopping, clothing sales at malls have lagged dining and entertainment businesses at new shopping centers.
Sun Chunlan is the party secretary of Tianjin and a member of the Communist Party's Central Committee and Politburo Birthplace: Raoyang County, Hebei Province Born: 1950 Country of ...