2/7
This is just the kind of policy China should be implementing. By allowing poorer rural residents to obtain the same services as their richer urban counterparts, it effectively increases the income of the poor, much of which will then be converted into higher consumption.
This is just the kind of policy China should be implementing. By allowing poorer rural residents to obtain the same services as their richer urban counterparts, it effectively increases the income of the poor, much of which will then be converted into higher consumption.
3/7
The problem is its funding. Unless there is a major revival of the property market, many local governments will be too strapped for funding to be able to afford better services for rural migrants.
The problem is its funding. Unless there is a major revival of the property market, many local governments will be too strapped for funding to be able to afford better services for rural migrants.
4/7
If they pay for these additional expenses by lowering services overall, this will simply represent a transfer from one group of households to another group. Total household income will not change and consumption will barely rise.
If they pay for these additional expenses by lowering services overall, this will simply represent a transfer from one group of households to another group. Total household income will not change and consumption will barely rise.
5/7
Local governments must be forced to pay for these services by running large deficits, but these deficits shouldn't be funded by borrowing, which would simply transfer the costs back to the household sector.
Local governments must be forced to pay for these services by running large deficits, but these deficits shouldn't be funded by borrowing, which would simply transfer the costs back to the household sector.
6/7
They should instead be funded by the liquidation of local government-owned assets. That is the only way these policies would represent a meaningful transfer of income from local governments to households, and that is the only way they will boost rebalancing.
They should instead be funded by the liquidation of local government-owned assets. That is the only way these policies would represent a meaningful transfer of income from local governments to households, and that is the only way they will boost rebalancing.
7/7
As of yet, however, there is very little evidence that Beijing has put into place policies that force local governments to liquidate assets. It won't be easy, but until that happens, there cannot really be any rebalancing of demand in the economy.
As of yet, however, there is very little evidence that Beijing has put into place policies that force local governments to liquidate assets. It won't be easy, but until that happens, there cannot really be any rebalancing of demand in the economy.
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