How China Could Boost Its Weak Consumption.
China has repeatedly pledged to make the consumer sector a more prominent driver of economic growth but is yet to implement any structural policy changes to achieve this.Analysts say potential costs in the trillions of dollars and risks that reform could bring instability are making officials wary of bold policy decisions.Below are policy options for Beijing and some of the trade-offs involved.
- The challenge China faces in boosting consumption lies not only in its economic structure but also in its complex social welfare system, which incentivizes low wages and high investment to encourage entrepreneurship.
- Will policymakers strike a balance between stimulating domestic demand through more generous subsidies and encouraging private enterprise growth, or will they prioritize state-owned enterprises over market-driven reforms?