After casino hub Macau unveiled fresh cash handouts of 10,000 patacas (US$1,247) to each of its permanent residents to boost consumption, debates over how mainland China should effectively stimulate domestic spending have reignited, with no clear resolution in sight.
Although economists have called for more and stronger actions under the consensus that the current stimulus policies are insufficient, while sluggish consumer demand persists amid belt-tightening by residents, debates have continued over the effective direction China should take to incentivise sustainable consumer spending.
Some have called for enhanced social security to instil greater financial security and encourage spending, while others advocated cash handouts to select groups to quickly lift consumption.
Wang Xiaolu, deputy director of the Beijing-based National Economic Research Institute, said China should repivot its economic policies to allocate more money to improve social welfare to boost demand, with “the most pressing need” being to implement large-scale unemployment benefits.
“The immediate priority to boost consumption is ensure comprehensive social security coverage in urban areas and expand affordable housing access for low-income residents,” he said, according to a transcript released last week from a National Economic Research Institute meeting late last month.
According to a report published late last year by China’s top economic planner, the National Development and Reform Commission, 964 million people in China lived off a monthly income of 2,000 yuan (US$249), accounting for nearly 70 per cent of its 1.4 billion population.
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