In Beijing, experts from Peking University and a former central bank adviser have suggested that China needs to increase its support for the growing services sector in order to stimulate consumption. This move aligns with the government's focus on boosting domestic consumption to drive economic growth amidst trade tensions with the U.S.
In response to the shift towards promoting household consumption, the authorities have decided to double the fiscal stimulus to 300 billion yuan ($41.46 billion). This increase is aimed at an enhanced subsidy program for items like electric vehicles, appliances, and other consumer goods.
During a meeting, Yan Se, an associate professor at Peking University's Institute of Economic Policy, proposed expanding the subsidy scheme to include the services sector, highlighting the sector's durability and ongoing nature compared to one-time purchases like consumer goods.
Recent data indicated a slowdown in the growth of sales for home appliances and audio-visual devices in the initial months of the year. Despite this, China's expenditure on household services recorded a year-on-year increase, accounting for a significant portion of total household spending.
Experts emphasized the importance of boosting household services spending in relation to the country's economic output. They projected that by 2035, household spending should constitute a higher percentage of economic output, with services consumption expected to play a more significant role in total household expenditure.
Furthermore, it was noted that the service industry is poised to become a leading source of employment in the future. The focus should not solely be on expanding the manufacturing sector's GDP share but on fostering a robust and innovative manufacturing industry.
Former central bank adviser Liu Shijin stressed the need to prioritize services consumption and accelerate urbanization efforts to raise the incomes of rural migrants. He underscored that urbanization plays a crucial role in enhancing services consumption, crucial for addressing the issue of insufficient overall consumption.