A view of a bustling shopping street at night in Shanghai, China. /CFP
China continues to experience a gradual resurgence in consumer market activity as it has shifted away from stringent COVID-19 controls, experts at a Chinese think tank said, underscoring the importance of broadening access to credit and boosting willingness to spend to prop up consumption in the short term.
Reviewing the country's economic performance in the third quarter at a press briefing on Thursday, Zhang Bin, a non-resident senior fellow at China Finance 40 Forum (CF40), said that a pivot away from the pandemic's grip has unlocked consumer spending, pointing to a rebound in residents' willingness to spend as critical to this resurgence.
The CF40's Q3 2023 macroeconomic policy report revealed a notable, but measured, uptick in household consumption, with urban residents' eagerness to spend reaching pre-pandemic levels at 65.1 percent, lessening the drag on economic vitality seen earlier this year.
Looking ahead, the report pointed to the need for adjustments in disposable income to fuel further consumer spending.
"Fiscal policy must bolster both present and future income prospects while cementing societal confidence through steadfast policy and regulatory clarity," said CF40 Senior Fellow Guo Kai.
Meanwhile, Zhang attributed the lag in current disposable income growth partly to a slackening pace in the growth of overall financial assets, urging for a boost in broad credit as a remedy.
Strategic increases in broad credit could pump more money into the pockets of individuals, businesses, and government entities alike, fostering a stronger inclination to spend and invest, said experts. This approach, coupled with a consistent proportion of disposable income within the wider social earnings, could propel total expenditures and, by extension, amplify consumer purchasing power, according to the experts.
The CF40 report further suggested that reducing policy interest rates, alongside ramping up public sector borrowing and expenditure, could catalyze broad credit expansion and subsequently elevate disposable incomes, spurring consumer spending in the short term.
Echoing this optimistic outlook, CF40 Committee Member and Essence Securities Chief Economist Gao Shanwen observed a natural and enduring revival in consumer behaviors, which are anticipated to bolster economic recovery as the year's final quarter welcomes continued policy support from the government.
"With these supportive measures set to roll out, we can expect consumption to significantly contribute to the economic rebound," Gao said.