China's latest plan to boost consumption serves as a positive policy signal for certain sectors, and the country needs to provide continued support for the sustained growth of people's income and of its private sector, said a scholar from Peking University on Monday.
China on Sunday made public a plan on special initiatives to boost consumption, as the world's second-largest economy moves to make domestic demand as the main engine and anchor of economic growth.
The plan, issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council, aims to vigorously boost consumption, stimulate domestic demand across the board, and increase spending power by increasing earnings and reducing financial burdens.
Speaking about the details of the plan with the China Global Television Network (CGTN), assistant professor Shi Fanqi from the School of Economics in Peking University said it's a good start, and he believes more specific efforts are needed to boost people's income and stimulate the market so the growth can be sustainable.
"Well, I think this is a policy that serves good intention. But I view it more as a policy signal saying that more attention should be paid to these sectors rather than specific policies with long-lasting effects. First of all, we should notice that consumption, especially income, cannot be boosted simply by what we call a 'special action plan'. We need continued support to promote the growth and development. The second thing to notice is that, instead a lot of government intervention in a lot of sectors, the important thing is to let the market flourish," he said.
Shi mentioned providing a stable business environment, and government intervention when the monopolies take power, or when there is very strong inequality.
The latest plan said China will accelerate the development and application of new technologies and products including autonomous driving, smart wearables, ultra-high-definition video, brain-computer interfaces, robotics and additive manufacturing, more commonly known as 3D printing, to create new high-growth consumption sectors.
It also connected consumer spending to broader social goals like elderly care improvement, childcare support and work-life balance, embedding consumption growth within China's wider development objectives.
Talking about emerging industries and people's welfare mentioned in the plan, Shi emphasized the importance of providing a level playing field for private sector innovation and ensuring better social security to allow citizens to focus more on business activities and less on long-term personal concerns.
"I think there are significant, or very strong growth potentials in these sectors. But again, we need some effective policies to not just promote but to facilitate those sectors. We know at this moment, a lot of issues with the Chinese business environment. There are two fold. The first is that there is the very strong dominance of the state-owned enterprises, but most of the technological innovation actually comes from the private sector. That means there should be more support to provide a level playing field. The second aspect is actually mentioned in the plan is to have a better or healthier population structure. That is to provide subsidies to the healthcare, etc. That basically provides better security, so that people can basically pay more attention to the business activities, rather than focus too much on their long-term development," said the scholar.
China's plan on boosting consumption sends positive policy signal for emerging sectors: scholar
