China’s 300 million migrant workers key to boost consumption, not lavish infrastructure, ex-adviser says

Former central bank adviser Liu Shijin says China’s 1 trillion yuan (US$139 billion) of ultra-long term special bonds should be used to improve services for migrant workers

China is eager for consumption to drive its economy, but the ongoing slump in the property market is weighing on spending

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China had around 298 million migrant workers at the end of 2023, with their average monthly income dropping by 3.6 per cent rise to 4,780 yuan (US$664). Photo: Xinhua

Published: 8:00am, 22 Mar 2024

China should spend more on public services for its nearly 300 million migrant workers, rather than on lavish infrastructure projects, a former central bank adviser has argued, as the country struggles to pivot towards a consumption-driven growth model.

Liu Shijin, former deputy director of the Development Research Centre of the State Council, said the key to expanding spending lies in bridging the gap between the income and demands in basic public services for China’s 900 million low to medium income group, which includes migrant workers.

The comments followed debates over how China should effectively utilise the 1 trillion yuan (US$139 billion) of ultra-long term special treasury bonds that will be issued this year, as well as how Beijing can boost its weak consumer sector and shift away from the export and investment-driven growth model that has sparked disputes at home and abroad.

“Millions of rural migrant workers in the city are still faced with unsolved challenges in housing, [children’s] education, social insurance, if you give them their own apartments, they will spend more on interior decorating and buying household appliances,” Liu said at the event organised by the China Europe International Business School in Beijing on Tuesday.

From a utilitarian perspective, this approach is more cost-effective

Liu Shijin

Many municipalities have rolled out supportive measures to boost economic growth at the beginning of the year, mostly large-scale projects worth hundreds of billions or even trillions of yuan.

“Even if 10 per cent of the money was taken out to finance the basic public services for these rural migrant workers, the money will pay off much better in terms of expanding demand, and the effect will be much bigger than building a few subway lines,” Liu added.