I'm Robert Lawrence Kuhn and here's what I'm watching: The slowdown in China's economy and the risks in China's financial system as China's long successful model of growth, export-driven and fixed-asset fueled, has reached its retirement age.
China's new growth model, emphasizing high-quality development and domestic consumption, is the vision for the future. Key, of course, is consumer confidence: People need to spend today, not worry about what may happen tomorrow.
This is a current conundrum. The readout of a Politburo meeting in July was blunt in its assessment that the economy is facing new difficulties, mainly insufficient domestic demand, but optimistic that "the economy has tremendous resilience and potential for development, and its long-term sound fundamentals remain unchanged."
Less than a week later, the State Council announced 20 targeted measures to restore and expand consumption. These included: Easing restrictions on car purchases; supporting people's demand for buying first homes and for upgraded housing; and spurring consumption in cultural tourism.
The measures are remarkably specific. For example, for increasing the consumption of home decoration and electronic products: Promote smart home appliances, functional furniture, and other products to develop smart and green homes, improve after-sales service for home appliances.
Facilitate exchanges of old household appliances for new ones and strengthen the recycling of used household appliances. Utilize new technologies such as ultra-high-definition video, virtual reality, and flexible displays. Develop wearable devices and smart products, and create scenarios for new electronic products.
In expanding consumption, priorities are digital consumption, especially e-commerce, and green consumption, especially low-carbon, energy-saving consumer products.
Beyond these short-term measures, the only way the Chinese economy can achieve sustainable growth long-term, is by shifting economic activity away from investment to household consumption, which at 38 percent of China's GDP is much lower than the 60 percent global average and about 70 percent in the U.S.
Looking longer term, last December, China released guidelines on expanding domestic demand to promote its development extending to 2035. To achieve the 2035 goals of new industrialization, informatization, urbanization and agricultural modernization, the country aims to boost investment in consumption, optimize distribution, bolster the quality of supply, and improve the market system.
The plan directives stress traditional consumption: Improve the quality of food and clothing consumption; enhance travel consumption; promote residential consumption; develop service consumption; advocate green and low-cost carbon consumption; cultivate cultural consumption; expand tourism consumption; augment elderly care and childcare services; improve educational services; promote mass sports consumption; and promote the sharing economy.
I'm keeping watch. I'm Robert Lawrence Kuhn.
Script: Robert Lawrence Kuhn
Editors: Yang Yutong, Hao Xinxin
Designer: Qi Haiming
Producer: Wang Ying
Supervisors: Xiao Jian, Adam Zhu
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