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Confidence essential to unlock purchasing power

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Chen jincheng official

Wages and social security hold the keys to igniting and sustaining mainland consumption according to Chen Jincheng, former deputy director-general of the Hebei Finance Bureau.

He said spending would depend on consistent increases in the incomes of workers and farmers and better social security.

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'According to theory, economic development is fuelled by three aspects, namely investment, exports and consumption. But China's economy is mainly driven by the former two,' he said. 'They look like two virile horses and an emaciated donkey.'

Mr Chen believed the lack of consumer spending was the direct result of low incomes for workers and farmers and the pressure they felt to save for housing, education, medical treatment and old age.

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The problem also stemmed from poor insurance coverage for unemployment, the elderly and the sick.

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