Vice Premier Li Keqiang spoke at Davos about the need to shift China’s economy toward one based on domestic consumption. Beijing’s leadership has long talked about boosting domestic consumption, but his speech held some encouraging signs for those who follow government rhetoric closely. Talk of stimulus and maintaining "moderately loose" policy, Beijing’s monetary mantra last year, had at its core a government focused on maintaining short-term stability through economic growth. Now that forecasts indicate China’s economy will likely grow about 10% this year, economic planners are once again placing an emphasis on the longer term.
However, there are few signs that the revival of domestic consumption goals is being accompanied by new policies aimed at actually achieving them. Li spoke once again of establishing a social safety net to free up savings, and of rural subsidies. These are not necessarily bad policies, but their effects will not be felt quickly. They also do little to address the problem of a lack of private investment. This is caused not by a lack of money, but rather an economy that still maintains systemic barriers to growth for private firms. More sustainable development will require not just stronger consumption, but an open market and a banking system that is keen to support private firms. Coming as it did at an international forum, Li’s speech gave few signs of plans for such structural change, preferring to present an image of continuity from the current generation of leaders to the next.