China’s weak consumer spending requires its leaders to upgrade policy toolkit, Beijing adviser says
- Retail sales, a key indicator of consumer spending in China, contracted by 3.9 per cent last year, and experts say reform measures are needed to reverse the trend
- Analysts have expressed concerns with the lingering weak recovery in domestic consumption, which is lagging behind a strong rebound in industrial production, investment and trade
Even though the Chinese economy continues its rapid recovery from the coronavirus shock, Beijing’s traditional policy prescriptions are too outdated to be successful in igniting a strong improvement in subdued consumer spending, a prominent adviser to the central government has warned.
More policy efforts to redistribute income and improve public welfare are needed, as well as more direct support for individual consumers, said Wang Yiming, vice-chairman of the China Centre for International Economic Exchanges and former deputy head of the Development Research Centre of the State Council. Wang personally advised Chinese President Xi Jinping on policy several times last year.
“[Chinese officials] are very experienced in guiding investment, and we have formed a set of effective methods,” Wang said at an online seminar on Tuesday. “But when it comes to guiding and expanding consumption, our means are relatively limited, and their effectiveness is not particularly significant.”
Wang’s comments came a day after China announced that its coronavirus-hit economy expanded by 2.3 per cent in 2020, which is expected to be the only positive growth rate among the worlds’ major economies. The growth rate also accelerated to 6.5 per cent in the fourth quarter, year on year.
But retail sales, a key indicator of consumer spending in the country, contracted by 3.9 per cent last year, with the growth rate decelerating to 4.6 per cent in December from 5 per cent in November.
