1/8
For all the excitement, most of these measures don't expand consumption at all. They are designed to "encourage" consumption, by improving delivery mechanisms, creating more consumption "occasions", promoting sports and cultural events, reducing...
reuters.com
For all the excitement, most of these measures don't expand consumption at all. They are designed to "encourage" consumption, by improving delivery mechanisms, creating more consumption "occasions", promoting sports and cultural events, reducing...
reuters.com
2/8
restrictions (for example on car purchases), extending shopping hours, improving consumption-related infrastructure, increasing advertising and marketing, advocating "healthier" consumption patterns, and so on.
See here for the full list.
gov.cn
restrictions (for example on car purchases), extending shopping hours, improving consumption-related infrastructure, increasing advertising and marketing, advocating "healthier" consumption patterns, and so on.
See here for the full list.
gov.cn
3/8
But what all of these measures miss is that the total consumption of Chinese households is limited by their household budgets, which is in turn limited by disposable household income. While Chinese households can shift spending from...
But what all of these measures miss is that the total consumption of Chinese households is limited by their household budgets, which is in turn limited by disposable household income. While Chinese households can shift spending from...
4/8
one set of goods to another, the total amount they can spend on total consumption is much harder to change, and certainly won't increaser just because cultural events are more heavily advertised or shopping malls stay open later. Unfortunately, because measures designed to...
one set of goods to another, the total amount they can spend on total consumption is much harder to change, and certainly won't increaser just because cultural events are more heavily advertised or shopping malls stay open later. Unfortunately, because measures designed to...
5/8
encourage the consumption of specific products will increase consumption of those products, policymakers will think their measures are working, but without an increase in household budgets, these measures will simply switch consumption from one set of products to another.
encourage the consumption of specific products will increase consumption of those products, policymakers will think their measures are working, but without an increase in household budgets, these measures will simply switch consumption from one set of products to another.
6/8
The few measures that will actually expand consumption will do so only because they deliver subsidies for specific goods, effectively increasing disposable household income by the amount of the subsidy. The problem with these measures is that they are too small to matter.
The few measures that will actually expand consumption will do so only because they deliver subsidies for specific goods, effectively increasing disposable household income by the amount of the subsidy. The problem with these measures is that they are too small to matter.
7/8
The easy prediction is that while over the short term we might see temporary variations in consumption rates (especially if we ever do get the long-awaited partial reversal in the COVID-related contraction in consumption), over the medium and longer terms, the only way...
The easy prediction is that while over the short term we might see temporary variations in consumption rates (especially if we ever do get the long-awaited partial reversal in the COVID-related contraction in consumption), over the medium and longer terms, the only way...
8/8
consumption will play a greater role in the economy is if there is an increase in the relative share ordinary households retain of China's GDP.
Of course that requires a reduction in the government share, and that's what makes it so difficult to implement.
consumption will play a greater role in the economy is if there is an increase in the relative share ordinary households retain of China's GDP.
Of course that requires a reduction in the government share, and that's what makes it so difficult to implement.
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