At the end of last week, Chinese state media published information according to which the number of citizens whose income is at a middle level in this country amounted to more than 500 million people.
Currently, Beijing is taking measures aimed at increasing the level of economic activity in the consumer environment. This is a logical effort. Currently, China is betting on consumer activity as a factor in stimulating economic growth, which has slowed down.
The media, citing an insider associated with the Communist Party’s Central Financial and Economic Affairs Commission of the Asian country, report that Beijing, as part of actions to ensure the mentioned growth, intends to focus on introducing innovations in the technology sector, intensifying the urbanization process and increasing the purchasing power of the population. According to the authorities, the specified factors will collectively become the driving force of a positive dynamic of the economy.
Currently, Chinese state media are increasingly publishing articles stating Beijing’s intention to take measures to maintain relatively rapid economic growth, which has a long-term character. The authorities of this country are striving to increase market confidence. After the slowdown in the growth of the world’s second-largest economy, the mentioned indicator is on a negative trajectory of gradual downturn.
Chinese state media, referring to the theory of growth stages by American economist Walt Rostow, argues that the current reality for the Asian country is a phase of high levels of mass consumption. Articles on this topic also note that the local market has a huge potential for development and global appeal.
In 2019, there were 400 million middle-income people in China. This data is an official estimate. At the same time, information about the increase in the mentioned figure to 500 million people was published without specifying the source of the information. Also, the media did not give a clear definition of this group of people in terms of economic indicators.
Beijing hopes that the purchasing power of Chinese residents, whose total population is 1.4 billion people, will become a factor in economic growth. Recently, the Asian country has been trying to overcome the negative impact of circumstances such as the protracted crisis in the real estate sector and a drop in external consumer demand for products produced by local companies.
In February, Vice Minister of Commerce Sheng Qiuping announced several measures by the Chinese government to stimulate consumer activity. Beijing intends to encourage citizens to make renovations to their homes and update household appliances, cars, and furniture. The latest incentives of a similar nature were unveiled last week in Shanghai. The authorities reported subsidies of up to 10,000 yuan ($1,389) for the purchase of new cars. It also became known about the similar financial support measure of 1,000 yuan for the buying of home appliances.
It is worth noting that in 2023, consumption was the main factor in the growth of the Chinese economy. The share of the relevant sector accounted for 82% of the increase in gross domestic product last year. Data from the National Bureau of Statistics shows that disposable income per capita in China in 2023 was fixed at 39,218 yuan. This figure is 6.1% higher than the indicator for 2022.
At the same time, some analysts warn of the risk that Beijing may face a continued slowdown in economic growth before the situation in this area improves. Zhang Wenkui, a researcher at the Development Research Center of the State Council, mentioned this warning in December while talking to media representatives. According to the expert, Beijing urgently needs to ensure annual economic growth of more than 5%.
Zhang Wenkui, mentioning the experience of mature economies such as Japan and Western European countries in the post-World War II recovery, noted that in this case, when the pace of the positive dynamic was reduced to about 4% or 3%, GDP per capita was relatively high. The expert stated that the mentioned states became relatively wealthy during the period of the specified tendencies.
In 2023, China’s economy showed growth of 5.2%, as evidenced by official data, which not everyone trusts, believing that the real result may be lower. GDP per capita in this country last year was 89,358 yuan. The mentioned indicator is about 17% of a similar figure in the United States.
Zhang Wenkui says that over the next two to three years, China will not be a truly wealthy country even if income growth is achieved.
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