China eyes demand-side reforms over stimulus measures to boost domestic consumption, economy
- New policy focus is in line with China’s dual-circulation economic strategy, as nation seeks to rely more on domestic demand and home-grown innovation
- But China’s top leadership has pointed to a lack of quality in the supply of goods and services as being incompatible with people’s desire for a better life
Beijing has initiated a new push to unleash the economy’s domestic consumption potential, pledging to institute a series of reforms to overhaul long-standing structural problems in the economy.
The new focus on “demand-side reforms” would mean greater efforts on addressing difficult structural issues, such as unequal income distribution, improving the social safety net, and reforming land-use and ownership policies as an alternative to large-scale government-provided consumer subsidies and investment stimulus measures, which have been, until now, Beijing’s preferred methods to support growth, according to analysts.
Demand-side reform was first mentioned at the December 11 meeting of the Politburo, China’s top decision-making body, headed by President Xi Jinping. This puts the initiative on par with supply-side structural reforms such as curbing industrial overcapacity and reducing financial risks that have dominated China’s economic policymaking over the past five years.
“We must break through bottlenecks, improve our weak links, and smooth the processes of production, distribution, circulation and consumption so that a higher-level dynamic balance between supply and demand can be formed,” the official Xinhua news agency reported, citing a Politburo statement.