Reviving consumer demand and bolstering consumer confidence will be key priorities for China's economy for the rest of the year, as the country seeks to drive a consumption-led recovery amid downward pressures, economists said.

The contribution of final consumption expenditure to economic growth reached 77.2 percent in the first half of the year. Therefore, boosting consumption will be a key step for expanding domestic demand and shoring up slowing growth momentum, they said.

A recovery in consumer spending still needs time to pick up due to the scarring effects of the COVID-19 pandemic, they said, adding that more efforts should be made to effectively raise household earnings, increase employment, boost consumer sentiment and promote the growth of key fields such as services consumption and new types of consumption.

"The current improvement in consumption is mainly restorative, and the foundation for continued recovery and expansion is not yet solid," said Wang Wei, head of the Institute of Market Economy at the Development Research Center of the State Council, the country's Cabinet.

Wang said the country should further promote services consumption in fields like culture, sports and tourism, as well as the nighttime market. The country should also issue housing consumption vouchers to the unemployed and low-income youth groups, allow the use of housing provident funds for the purchase of home appliances and services, and increase credit support for education, healthcare and other services consumption, she said.

China's retail sales, a key indicator of consumer spending, grew by 2.5 percent year-on-year in July, compared with 3.1 percent in June, according to the National Bureau of Statistics.

The country has already pledged efforts to expand and restore consumption. On July 24, a meeting of the Political Bureau of the Communist Party of China Central Committee called for unleashing the fundamental role of consumption in driving economic growth.

Policymakers rolled out a raft of measures last month to boost consumption of products and services such as automobiles, electronics, housing and home decor.

Fu Yifu, a senior researcher at the Star Atlas Institute of Finance, said that the measures will help unleash the consumption potential and drive a gradual recovery in buying sentiment.

Given the gradual pickup in economic activity, improvement in corporate profitability and stronger policy support, consumption will likely perform better in the second half, Fu said.

Stable employment vital

Fu also highlighted the importance of stabilizing employment, saying that stable jobs provide a steady source of income and thus help restore consumer purchasing power. The country should further cut taxes and fees, offer subsidies and increase financial support for small- and medium-sized enterprises, a major source of employment.

He said more efforts are needed to effectively raise the take-home pay of middle- and low-income groups, narrow income disparities among households, and further improve the social security system.

The National Development and Reform Commission, China's top economic regulator, recently held a meeting to discuss measures for increasing household incomes. It said the country will formulate measures to enhance incomes for the low-income group and expand the middle-income group.

Despite the continued recovery trend, consumption lacks momentum amid slowing personal income growth, the upgrade of the consumption structure and adjustments in specific sectors, said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation's e-commerce research institute.

Hong said he believes the key is regulating the distribution of incomes, stimulating household consumption potential and cultivating new consumption growth points to drive consumption upgrades.

Policymakers said at a recent news conference that China will better meet people's diverse demand in car consumption, promote rural consumption and strengthen support for those having difficulty finding jobs.

Zhang Zhibing, a member of the National Committee of the Chinese People's Political Consultative Conference, said that since China optimized its COVID-19 response measures, the domestic consumption market has been continuously warming up.

"Particularly, the female consumption market boasts significant growth opportunities, and the 'her economy' is deeply influencing the transformation and high-quality development of the consumption market," said Zhang, who is also general manager of Southern Finance Omnimedia Corp.

Kapal Api Coffee, an Indonesian coffee brand that accounts for over half of the total market share in Indonesia, said the company is bullish on coffee consumption in China and is planning to open more stores in the nation.

"We have seen growing customer flows at our stores, and sales have been booming," said Jiang Jiawen, marketing manager of Kapal Api China.

"We are highly confident about the China market. We hope to find potential partners to further grow our business in the country," she said.