1/4
"China has issued guidance to all provinces to build a basic elderly care system by 2025." This is certainly a much-needed step in the right direction that can help reduce precautionary saving.
reuters.com
"China has issued guidance to all provinces to build a basic elderly care system by 2025." This is certainly a much-needed step in the right direction that can help reduce precautionary saving.
reuters.com
2/4
But whether it reduces economy-wide saving and boosts overall consumption depends crucially on how it is funded. Local governments are too squeezed for revenues to be able to fund this directly.
But whether it reduces economy-wide saving and boosts overall consumption depends crucially on how it is funded. Local governments are too squeezed for revenues to be able to fund this directly.
3/4
If instead they fund it by raising fees and taxes on households, or by cutting existing services to households, it will mainly represent transfers from non-elderly households to the elderly, in which case its overall impact on consumption will be negligible.
If instead they fund it by raising fees and taxes on households, or by cutting existing services to households, it will mainly represent transfers from non-elderly households to the elderly, in which case its overall impact on consumption will be negligible.
4/4
If, however, they fund it by liquidating assets owned by local governments, it will represent exactly the kind of transfers to households that will boost consumption and reduce economy-wide saving.
If, however, they fund it by liquidating assets owned by local governments, it will represent exactly the kind of transfers to households that will boost consumption and reduce economy-wide saving.
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