2023-08-25 22:03:00
BEIJING/HONG KONG (Archyde.com) – Erin Yao, a 30-year-old book editor living in Beijing, has taken street dance classes and traveled all she could in the three years since the Chinese government’s “zero coronavirus” policy. I was going to do something that wasn’t there.
On August 25, Erin Yao, 30, a book editor living in Beijing, went to street dance classes and traveled to see what she could not do during the three years the Chinese government continued its “zero coronavirus” policy. I was going to FILE PHOTO: Central Shanghai March 2023. REUTERS/Aly Song
But they’ve given up on that and are saving more out of their paychecks than they did during the pandemic.
“I ask myself if I have enough savings in case I suddenly fall ill. If I lose my job, will I have enough money to live on until I find another one?” He explained why he changed the way he spent his money.
China’s economic growth model of the 1980s has caused Yao to tighten his purse strings. Many argue that the model relied heavily on investments in real estate, infrastructure and mining, and did not do enough to increase consumer income and consumption.
China’s economic stagnation has made it urgent to “rebalance,” or correct imbalances, but the transfer of economic resources to households involves difficult decisions that make the immediate pain even worse. I need it.
Specifically, raising the share of household income in national income means lower shares in other sectors, especially China’s huge mining and industrial sectors and the government sector.
“If the share of the industrial and government sectors falls, a recession is inevitable,” said Juan Oates, China economist at Fasom Consulting. I see China moving toward “Japanification.” “Japanification” is a term that refers to Japan’s “lost decades” of economic stagnation since the 1990s.
In theory, Yao could spend more if he could find a job that paid more than 8,000 yuan ($1,097) a month. But China’s job market is weak, with a record youth unemployment rate of more than 21%.
The private sector, which accounts for 80% of new urban jobs, has yet to recover from the government’s regulatory crackdown on industries such as high-tech. Policymakers have indicated plans to increase credit to businesses, but businesses are ultimately constrained by weak domestic demand.
Another way to get people like Yao to spend is by addressing their concerns.
Many economists have called on countries to strengthen social safety nets to correct economic imbalances.
In Beijing, where Ms. Yao lives, unemployment benefits range from three to 24 months and can be up to 2,233 yuan a month. This amount is less than the rent for Yao’s 12-square-meter room.
Yao’s parents live in a rural area. She will soon reach retirement age, but her pension is only 1,500 yuan per person. Ms. Yao pays 300 yuan a month for her father’s medicine, which is the same amount as a dance class.
Yao sighs, saying, “If the public medical insurance covers more of the medical expenses for the elderly, I’ll be relieved.” Due to her financial worries, she is reluctant to have children. China is aging, and the population is declining, especially among people in their 20s to 40s, when consumption peaks.
In response to calls from the Communist Party leadership, government departments have launched dozens of consumption-boosting measures over the past month, including subsidies for automobiles and home appliances, extended restaurant opening hours, and promotion of tourism and entertainment activities. Ta.
But Yao’s reaction is cold. I like consumption tickets issued by local governments. However, from a macroeconomic perspective, the amount of these notes is too small, and business response has been sluggish.
“There are no measures to really boost demand,” said Jens Eskelund, president of the European Chamber of Commerce in China, noting that stimulation of consumption is more important than support from the supply side.
From economists, demand-side policy proposals include improving public services to make them more widely available, increasing social security benefits, strengthening workers’ legal bargaining power, and increasing the shareholding of state-owned enterprises to citizens. and the distribution of
But the question is who will bear the costs associated with such policies? Raising social security benefits and increasing the burden on businesses would also hurt jobs and growth. What remains is the government sector, but local governments are hit by a debt crisis.
Local governments are short on cash but rich in assets. The net assets of non-financial state-owned enterprises will reach 76.6 trillion yuan in 2021.
Michael Pettis, a senior researcher at Carnegie China, estimated that China could sustain current growth if the central government encouraged local governments to transfer the equivalent of 1% to 1.5% of GDP to households.
He said the biggest political issue in the next two years would be the conflict between the central and local governments over how to allocate the costs of coordination.
1693024672
#Focus #Chinas #economic #slowdown #multiple #obstacles #stimulating #consumption #Archyde.com