The Chinese central government has flagged the launch of fresh policies to further spur consumption in the new year.
The state-owned Economic Information Daily reports that central government agencies including the Ministry of Commerce and the National Development and Reform Commission (NDRC) are currently researching and drafting a raft of policies to drive consumption in 2019.
These will include policies to spur gains in urban and rural incomes and strengthen purchasing capability; policies to accelerate the growth of the services sector and expand consumption growth points, as well as further reductions in tariffs and measures to expand commercial imports.
Wu Qi (吴琦), a senior researcher with the Pangoal Institution (盘古智库), said that consumption has already emerged as the leading driver of China’s economic growth, and that the expansion of domestic consumption would be a key focal point of current policy given deceleration in investment growth and pressure on exports.
The contribution rate of Chinese consumption to economic growth for the first three quarters of 2018 was 78%, for a rise of 13.5 percentage points compared to the same period in 2017, further cementing consumption’s role as the leading driver of China’s economy.
The Chinese government expects consumer goods sales to rise by around 9% in 2019, and the contribution rate of Chinese consumption to economic growth to stand at around 65%.
China’s Ministry of Commerce has said that the Chinese economy is transitioning from high-speed growth to high-quality growth, and that following more than three decades of high speed growth the consumer market is seeing ongoing structural upgrades.
NDRC also recently announced that it would work with relevant departments to “continually improve measures and policies to drive urban and rural household income growth, and deepen research into high-level designs to expand the medium-income demographic.”
Chen Lifen (陈丽芬), a researcher from the Ministry of Commerce, said that policies to increase household incomes and raise the incomes of consumers will increase their purchasing capability, while improvements to social welfare mechanisms will give them the confidence to reduce their savings rates and raise expenditures.
Wang Bin (王斌), vice-head of the Market Operations Department of the Ministry of Commerce, said that the ageing of the population and adjustments to family planning policies mean that people born in the nineties and the noughties are now an emerging demographic that will bring new growth points to economic consumption.