BEIJING — “Chinese Leaders Shift Stimulus Focus to Consumers”,On Tuesday, Chinese leaders announced that this year’s economic stimulus measures will prioritize consumer spending rather than traditional infrastructure investments. This shift marks a departure from their usual approach of channeling funds into large-scale projects.
The world’s second-largest economy missed growth forecasts in Q2 and faces deflationary pressures, with retail sales and imports lagging behind industrial output and exports.
At its July meeting, the Politburo pledged to implement “countercyclical adjustments” throughout 2024 to achieve a 5% economic growth target for the year.
“The meeting stressed that it is necessary to focus on boosting consumption to expand domestic demand,” the official news agency Xinhua said.
The Politburo said policies should increase residents’ income “through multiple channels” and enhance the “ability and willingness” of low- and middle-income groups to spend.
It called for measures to improve welfare for the elderly and children, and “weave a dense and solid social security net”.
In referencing incomes and social welfare, it nodded to measures advocated by some economists who have long argued that China’s economic model relies too heavily on investment and has produced much more debt than growth in the past 15 years.
Analysts said the latest Politburo readout contained more references to household consumption than previous ones, but this did not necessarily point to a new top-level agenda for a structural shift to rebalance the economy.
The meeting’s summary still gave prominent space to pursuing “new productive forces”, a term coined by President Xi Jinping last year that envisions scientific research and technological upgrades for the world’s largest industrial complex.
“The meeting did call for policymaking to focus more on household welfare,” Julian Evans-Pritchard, head of China economics at Capital Economics. “This sounds promising on paper.”
