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economy continues its rapid recovery from the coronavirus shock, Beijing’s traditional policy prescriptions are too outdated to be successful in igniting a strong improvement in subdued consumer spending, a prominent adviser to the central government has warned, reported the South China Morning Post.
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.”
Analysts have expressed concerns amid the lingering weak recovery in domestic consumption, which is lagging behind a strong rebound in industrial production, investment and trade. If consumption remains relatively weak, it could not only undermine the sustainability of China’s V-shaped rebound but could also impair the world’s second-largest economy in the longer term, analysts said, reported the SCMP.