BEIJING: A central bank policy adviser in China has suggested that the country should shift its stimulus focus from investment to consumption and ease urban residency curbs to enhance the spending power of migrant workers, in order to address economic bottlenecks and weaknesses. Cai Fang, an influential economist at the Chinese Academy of Social Sciences and adviser to the People’s Bank of China (PBOC), made these comments during a business forum, according to a transcript of his speech.
Cai stated that reforms to China’s “hukou” system, which regulates residence permits, would increase consumption among the 180 million rural migrant workers residing in cities. He estimated that these reforms could result in an increase of over 2 trillion yuan ($276.59 billion) in migrant workers’ spending.
The residence permit system, which has been in place since the 1950s, has been heavily criticized for hindering internal migration and exacerbating the urban-rural divide. In response, China has been gradually loosening its grip on urban residence permits to support urbanization.
While the Chinese government has pledged to prioritize consumption recovery this year, it has not yet provided significant subsidies for consumers. Additionally, local authorities continue to heavily invest in infrastructure projects to stimulate growth.
Investors are awaiting the outcome of a Politburo meeting in July for insights into China’s policy direction after a cabinet meeting was held at the end of June to discuss measures to boost economic growth. – Reuters
Credit: The Star : Business Feed
