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Boosting consumption with balanced policy

By LIU YUKUN | China Daily | Updated: 2020-12-28 09:16
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Couriers sort packages at a dispatch center in Tongzhou district, Beijing, during the Nov 11 Singles Day sales festival. Consumption will remain a driver of China's economic growth. [Photo by CAI DAIZHENG/FOR CHINA DAILY]

Demand management to complement supply reform, ride out uncertainties

Huang Xinyi, 30, who landed her third job this month after a three-month gap in Beijing, rushed to snag another round of free digital coupons issued by the city government to boost consumption across multiple e-commerce platforms.

"I did a lot of research to get more coupons on different platforms, mainly online, to order food delivery, and buy electrical appliances and clothes. That saved me a lot of money with which I could buy other stuff that I needed," she said.

Amid challenges from COVID-19, trade uncertainties and the restructuring of the global value chain, consumption is becoming increasingly important for China's economic development.

The national government has rolled out measures to boost demand. The domestic market has also seen a boom in new forms of consumption such as e-commerce, livestreaming, digitalized healthcare and community services.

This year's Central Economic Work Conference, held from Dec 16 to Dec 18 in Beijing, emphasized the management of the demand side.

Policymakers reiterated the importance of pursuing supply-side structural reform as the main task while emphasizing the management of the demand side to unblock difficulties, strengthen weak areas and connect procedures including production, distribution and consumption.

Experts said it sends a signal that the government will make more efforts in boosting domestic demand. They think efforts to boost domestic demand will shift from being investment-driven to being consumption-driven, and there will be more measures to encourage consumption in traditional areas as well as emerging fields.

Wei Jigang, a research fellow at the Development Research Center of the State Council, said the government's emphasis on the management of the demand side is a strategic move to develop a strong domestic market, release the vitality and potential of market demand, better observe the latest trends in market demand, and effect necessary policy changes.

"The management of the demand side offers a solution to uncertainties of economic development caused by COVID-19 and global supply chain restructuring, and China's need for stable and sustainable development," Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said.

"Boosting domestic demand and adjusting the dynamic relationship between supply and demand will become an important aspect of the government's work in the next year."

The problem of insufficient demand became more prominent this year, and demand recovery is slower than supply. That is what Zhang Liqun, a researcher of macroeconomy of the Development Research Center of the State Council, told Yicai, an economic news and analysis website.

Zhang said the importance of boosting consumption is also emphasized in the government's promotion of the dual-circulation development pattern, which regards the domestic circulation as the mainstay, with domestic and international circulations reinforcing each other.

According to Zhang, the dual-circulation development pattern is related to all aspects of economic operations, and special emphasis is placed on the formation of a higher-level dynamic balance of demand driving supply, and supply creating demand in turn.

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