BEIJING: China will be looking to tweak its economic policies to get consumers to spend more, policy advisers in Beijing said after retail sales emerged as a weak spot in better-than-expected GDP data, underlining the need for reform.
They said that while supporting employment was key in the short run, reforms to help fatten ordinary people’s wallets were needed to boost domestic spending - a priority for President Xi Jinping’s “dual circulation” strategy to cut China’s reliance on overseas markets, report agencies.“We need to discuss ways to boost incomes,” said Yao Jingyuan, an adviser to the Chinese cabinet. “Who doesn’t spend if they’re rich?”
The advisers are influential in Beijing, and their recommendations are likely to be considered. Calls for deepening reforms to spur domestic consumption have been rising since Xi unveiled the dual circulation strategy last year.
Allowing more migration to cities, increasing the minimum wage, and easing restrictions like one on the sale of cars in big metros could be some of the policy initiatives to be considered, the advisers said.
China’s economy grew 2.3 per cent in 2020, according to official data this week, making it likely the only major economy that expanded last year.
But retail sales fell 3.9 per cent over the full year, marking the first contraction since 1968, and final consumption dragged on growth for the first time in at least four decades, the data showed.
Worryingly for policymakers, retail sales rose just 4.6 per cent on year in December, missing expectations and slowing for the first time since steadily accelerating from the pandemic-induced slump the previous winter.Incomes from catering fell by 16.6 per cent in 2020, and people’s average spending on education, culture and entertainment dropped by nearly a fifth.
Lost wages, more saving, job losses, and continued fears over COVID-19 accounted for much of the sluggish consumption, analysts said. They warned that if sustained, the slowdown could drag on economic recovery and jeopardize goals to rebalance the economy away from wasteful infrastructure investment and polluting industry.