BEIJING, Jul 10 (Reuters) – China should shift the focus of its stimulus from investment to consumption and further ease restrictions on urban living to boost the purchasing power of migrant workers, a central bank policy adviser said.
“The target of our stimulus should shift from investment to consumption, which may more directly correspond to our actual economic bottlenecks and weaknesses,” Cai Fang, an adviser to the People’s Bank of China (PBOC), said at a business forum over the weekend. , according to a transcript of his speech.
Reforms to China’s residence permit system, or “hukou,” will boost consumption for 180 million migrant rural workers who have entered cities, said Cai, who is also an influential economist at the Chinese Academy of Social Sciences, a leading state think tank. . .
That could increase spending by migrant workers by more than 2 trillion yuan ($276.59 billion), he said.
China is pushing for reforms to gradually loosen its grip on urban residency permits – in place since the 1950s – to support urbanization. The residence permit has been criticized for hindering internal migration and widening the urban-rural divide.
The government has promised to prioritize consumption recovery this year, but so far has failed to provide large-scale subsidies to consumers, while local authorities are still investing heavily in infrastructure projects to boost growth.
The Chinese cabinet met in late June to discuss measures to boost economic growth and investors look forward to an expected Politburo meeting in July for guidance on policy direction.
($1 = 7.2308 Chinese Yuan)
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