China embarks on transition to consumption-centred economy as Beijing moves to unleash spending power: investment guru
- Fang Fenglei, founder and chairman of Hopu Investment Management, says the transition will take a decade
- Issues confronting China – property-sector woes, local government debts and the debts of small and medium-sized banks – are all manageable, Fang says
Weak domestic consumption remains the “real worry” for China’s growth outlook, but there are encouraging signs that Beijing is serious about boosting income and transitioning to an economy that is more centred on consumer spending, according to investment guru Fang Fenglei.
“China was used to putting a discount on enhancing the consumption power of peasants and ordinary consumers, because it had to focus on development over the past decades,” he said. “Now with the GDP [gross deomestic product] per capita reaching US$13,000, the fundamental matter of increasing income levels should be resolved.”
There are 80 million civil servants in China plus numerous state-owned enterprises that are awaiting a salary boost. As long as the income situation of this huge population improves, Fang said, consumption power will be released.
