At its July 30 meeting, the Political Bureau of the Communist Party of China (China’s top ruling body) stated that reform measures should be used more often to expand domestic consumption, reported the
Economic Daily.
Writing in the newspaper, Kuan Xianming, dean of the Institute for Economic Studies, China Institute for Reform and Development (CIRD), stressed the fundamental importance of China’s 1.4-billion-people market to the country’s economic growth.
And the market size is expanding, he said. The total retail sales of consumer goods in 2018 stood at 38.1 trillion yuan (US$5.4 trillion), double the 2011 figure. The consumption mix has also been upgrading. Data shows that service-related consumption took up 42.6 percent of total consumption in 2017, 44.2 percent in 2018, and 49.2 percent in the first half of 2019.
These figures show that China’s consumption still has great potential and much space for upgrading. But releasing the potential needs stimulation from macro-economic policies – and changes in related mechanisms, he argued.
While China has managed an adequate supply of goods, it still experiences an under-supply of certain badly needed services – especially healthcare and education, and problems like service quality mismatching society’s needs and relatively low service standards. This constrains the unleashing of consumption demand. The government needs to open the services market wider, he proposed.
In 2018, rural Chinese had a per capita consumption that was less than the half of their urban counterparts, he wrote. To release the potential from this market, China needs to speed up equalizing basic public services between rural and urban China, as well as deepen rural reform – including land reform – to increase their property-related income.
The State should also deepen reform of the income distribution mechanism to improve people’s consumption capabilities, and build a sounder social security net.
Judging from past experience, China's expansion of consumption and upgrading of the consumption mix have much to do with opening-up, and now its consumption market is also closely related to the global market, so unleashing its potential is impossible without high-level opening-up, he said.
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