Chinese government urged to boost domestic demand
Leading economists are calling on the Chinese government bring in policies to boost consumer consumption, citing continued weak domestic demand as a barrier to improved economic growth.
They say that boosting consumption will be the primary driving force supporting the country,s economic growth in the second half of 2024, and will be crucial for achieving the country’s growth target of around 5% in 2024.
Huang Hanquan, head of the Chinese Academy of Macroeconomic Research, which is affiliated with the National Development and Reform Commission, said that boosting people’s willingness to spend money will be a challenge for China’s steady economic growth in the second half of the year, adding that lacklustre consumer demand remains the core problem.
“It is advisable for the country to further step up efforts to drive large-scale equipment upgrades and trade-in deals for consumer goods, and to improve the supply-side offering of consumer goods and services, in a bid to cater to consumers’ rising demand for new types of consumption,” he said in an interview with the China Daily website.
“China still has huge potential to further boost consumption, given the potential growth in services consumption, especially in fields including education, elderly care, healthcare, sports and entertainment,” Huang added.
Recent data from the National Bureau of Statistics (NBS) showed that consumption was a major driver of growth in the first half of the year, with final consumption accounting for more than 60% of China’s economic growth, or three percentage points of the GDP growth rate.
China’s retail sales, a key measurement of consumer spending, grew 3.7% year-on-year during the January-June period, which was lower than the national GDP growth rate of 5%, according to the NBS.
Huang added that additional efforts are needed to create more jobs, raise incomes, improve the social security system to free up savings, and create a better consumption environment to encourage residents to spend.
Huang said that China has the capabilities and conditions to meet its annual growth target this year.
“A slew of existing economic stimulus measures will gradually take effect in the second half of the year, and the government is poised to roll out a series of policy measures to implement the reforms,” he said.
Huang also highlighted the country’s ongoing efforts to foster technological innovation and driving industrial upgrading, moves he said would inject strong impetus into economic growth.
Chen Wenling, chief economist at the China Center for International Economic Exchanges in Beijing, said the country’s increased measures to deepen reforms and boost demand will help bolster economic growth in the remainder of the year.
Citing the government’s issuing of long-term treasury bonds, she said the move will further boost domestic demand, as the raised funds will be used mainly for supporting the implementation of major national strategies, building up security capacity in key areas, and driving the promotion of large-scale equipment upgrades.
China needs to take more steps to boost confidence among consumers and expand consumption demand, so more efforts should be made to ensure sufficient job creation and an improved supply-side ecosystem, Chen added.
China’s unemployment rates improve
According to the latest data from the NBS, the average urban surveyed unemployment rate in the first quarter was 5.5%, a slight decrease from the previous quarter. In April, with the arrival of the peak production and business season, employment increased, with the unemployment rate falling to 5%, a decrease of 0.2 percentage points quarter-on-quarter.
According to the NBS, the unemployment rate for young people aged 16-24 dropped to 13.2% in June from 14.2% in May, marking a decrease for three consecutive months.
Kake Haselkorn, visiting professor at the School of Journalism and Communication, Tsinghua University, said: “Looking ahead, China’s anticipated digital technology growth over the next several decades can potentially bring profound shifts in economic development paradigms and industrial structures, likely reshaping employment dynamics significantly. These evolving trends are crucial for predicting China’s future employment landscape.”
