close
close

The debate over consumer incentives in China is being reignited without a clear answer

The debate over consumer incentives in China is being reignited without a clear answer

After casino hub Macau announced it was giving new cash grants of 10,000 patacas ($1,247) to each of its permanent residents to boost consumption, debates are raging over how mainland China could effectively boost domestic spending , flared up again with no clear solution in sight.

Although economists have called for more and stronger measures, agreeing that current stimulus measures are inadequate while consumer demand continues due to residents’ austerity measures, debates have continued over what effective direction China should take to stimulate sustained consumer spending to accomplish.

Some called for improving Social Security to provide greater financial security and encourage spending, while others advocated cash handouts to select groups to quickly boost consumption.

Wang Xiaolu, deputy director of the Beijing-based National Economic Research Institute, said China should reorient its economic policies and allocate more money to improving social welfare to boost demand, with “the most urgent need” being the introduction of large-scale unemployment benefits.

“The immediate priority to boost consumption is to ensure comprehensive social security coverage in urban areas and expand access to affordable housing for low-income residents,” he said, according to a transcript from a National Economic Research Institute meeting last week was released late last month.

According to a report released late last year by China’s top economic planner, the National Development and Reform Commission, 964 million people in China lived on a monthly income of 2,000 yuan ($249), accounting for nearly 70 percent of the 1, 4 billion inhabitants.