An adviser to China’s central bank says the top priority of policymakers needs to be stimulating household consumption, comments that come as an economic recovery falters.
“The most urgent goal now is to stimulate household consumption, and it is necessary to use all reasonable, legally compliant and economic channels to put money in residents’ pockets,” according to Cai Fang, a member of the monetary policy committee at the People’s Bank of China.
Cai added in the article posted late Monday on a social media account of the China Finance 40 Forum, one of the nation’s top economic think tanks, that continued unemployment in the wake of the pandemic is crimping household spending and that consumer confidence is expected to weaken without new policies.
See: China’s Economic Recovery Faces Risks From Property Crisis
Cai has been a proponent of providing direct stimulus to consumers to boost spending, an approach that Beijing has so far been unwilling to take. Earlier this year, he said direct stimulus of 4 trillion yuan ($551 billion) paid directly to Chinese households is an option to spur a recovery in consumer spending that has been slowed by weak wage growth during the pandemic.
China’s economic rebound is facing headwinds from a worsening property slump. Official figures due Tuesday morning are expected to show only moderate increases in industrial output, retail sales and fixed-asset investment in July.
More: China Needs Household Stimulus to Boost Recovery: PBOC Adviser
The weak data will likely put pressure on Beijing to add more monetary or fiscal stimulus after a fairly muted response so far. Latest lending data showing new loans plunging to a 14-year low in July spurred calls for more monetary easing, including a reduction in the amount of cash banks must hold in reserves.
In July Cai called on the government to reform its household registration system to unleash the consumption potential of its large pool of migrant workers.
