Efforts to boost consumption urged

A growing number of economists are calling on Chinese policymakers to ramp up efforts to revive consumer sentiment and stabilize expectations, in a bid to address the pressing challenges of still-weak domestic demand and to bolster the world's second-largest economy.

Among the traditional trio driving China's economic development — exports, investment and consumption — the economists emphasized that boosting consumption will be the primary driving force supporting the country's economic growth in the second half of 2024.They said this will be crucial for achieving the country's growth target of around 5 percent this year.

Despite headwinds both at home and abroad, they said the economy will likely stabilize in the remainder of the year, thanks to a slew of stimulus measures taking effect gradually, more steps to implement economic structural reforms, and the country's accelerated push to foster new quality productive forces.

Huang Hanquan, head of the Chinese Academy of Macroeconomic Research, which is affiliated with the National Development and Reform Commission, said that boosting people's willingness to spend money will be a challenge for China's steady economic growth in the second half of the year, adding that lackluster consumer demand remains the core problem.

"It is advisable for the country to further step up efforts to drive large-scale equipment upgrades and trade-in deals for consumer goods, and to improve the supply-side offering of consumer goods and services, in a bid to cater to consumers' rising demand for new types of consumption," he said during a recent interview with China Daily.

"China still has huge potential to further boost consumption, given the potential growth in services consumption, especially in fields including education, elderly care, healthcare, sports and entertainment," Huang added.

Consumption played a major role in propelling growth in the first half of the year, with final consumption accounting for more than 60 percent of China's economic growth, or 3 percentage points of the GDP growth rate, data from the National Bureau of Statistics showed.

China's retail sales, a key measurement of consumer spending, grew 3.7 percent year-on-year during the January-June period, which was lower than the nation's GDP growth rate of 5 percent and the 5.3 percent growth rate of per capita disposable income in the first half, according to the NBS.

Looking ahead, Huang said that additional efforts are needed to create more jobs, raise people's incomes, improve the social security system to free up savings, and create a better consumption environment to encourage residents to spend.

Although the broader economy is still facing pressures as well as mounting uncertainties, Huang said that China has the capabilities and conditions to meet its annual growth target this year.

"A slew of existing economic stimulus measures will gradually take effect in the second half of the year, and the government is poised to roll out a series of policy measures to implement the reforms listed in the resolution that was adopted during the third plenary session of the 20th Central Committee of the Communist Party of China in July," he said.

Huang also highlighted the country's ongoing efforts to foster new quality productive forces, notably boosting technological innovation and driving industrial upgrading, saying that the moves will inject strong impetus into economic growth.

Chen Wenling, chief economist at the China Center for International Economic Exchanges in Beijing, said the country's stepped-up measures to deepen reforms and boost demand will help inject vigor into economic growth in the remainder of the year.

Citing the issuance of ultralong-term special treasury bonds, she said the move will further boost domestic demand, as the raised funds will be used mainly for supporting the implementation of major national strategies, building up security capacity in key areas, and driving the promotion of large-scale equipment upgrades and trade-in programs for consumer goods.

To further bolster the economy, China needs to take more steps to boost confidence among consumers and expand consumption demand, so more efforts should be made to ensure sufficient job creation and an improved supply-side ecosystem, Chen added.