A Key Driver for Economic Growth
As China faces a declining property market and rising global uncertainties, consumption is poised to play an even more crucial role in driving economic growth. Policymakers should focus on introducing consumption-boosting policies, recognizing that boosting residents' income is key for long-term growth.
Despite a stable start to the year, China's consumption levels remain lower than the global average, presenting significant growth potential. Analyses show that China's consumption rate is only 55.6% compared to the global average of 73.22% for economies with similar per capita GDP.
Analysts believe that rebalancing national income distribution in favor of households, especially those in the middle and lower-income brackets, is crucial for unlocking consumption's full potential. This can be achieved through measures like perfecting the tax system, increasing transfer payments, and accelerating the market-oriented circulation of rural land.
Governments should also enhance fiscal and monetary support to encourage consumer spending. Scaling up fiscal funding for the consumer goods trade-in initiative, handing out consumption vouchers, and developing the consumer finance sector are key steps.
Reducing the mortgage interest rate is another priority. The high mortgage burden limits resources available for other consumption activities. A reduction of just 1 percentage point could save households around 400 billion yuan in annual expenditure, unlocking their consumption potential.
By implementing these measures, China can leverage its vast domestic consumption potential to drive economic growth and navigate the current economic challenges.
8 Comments
Rotfront
“Emphasizing increased domestic consumption is a smart move given the current global uncertainties.”
Matzomaster
“It ignores that the declining property market could be a sign of deeper systemic problems, not just a consumption issue.”
Karamba
“The plan may stimulate demand short-term, but it doesn’t address issues like environmental sustainability or inequality.”
Rotfront
“Lower consumption levels might be a symptom of more complex social challenges – not just an income problem.”
Karamba
“Targeted policies like these can help counteract the downsides of a declining property market.”
Africa
“Encouraging a market-oriented circulation of rural land could be transformative for rural economies.”
Stan Marsh
“The analysis seems to justify policies without addressing the real reasons behind the low consumption rate.”
Donatello
“This is a pragmatic and comprehensive strategy that adapts well to the current global economic challenges.”