Mid­dle-in­come group can be a bridge to sus­tain­able growth

China Daily (Canada) - - LIFE -

The au­thor­i­ties’ lat­est call for ef­forts to ex­pand the mid­dle-in­come group is much needed, be­cause China’s sus­tain­able growth in the long run is de­pen­dent on the for­ma­tion of a sig­nif­i­cantly larger mid­dlein­come group who will in­crease con­sump­tion and re­ward sup­ply-side re­forms that best serve their needs.

At a meet­ing of the Cen­tral Lead­ing Group for Fi­nan­cial and Eco­nomic Af­fairs onMon­day, Pres­i­dent Xi Jin­ping par­tic­u­larly stressed ef­forts to ex­pand the mid­dlein­come group and im­prove the in­come dis­tri­bu­tion mech­a­nism.

This newly-found sense of ur­gency to fur­ther in­crease the num­ber of mid­dle-in­come work­ers is surely re­lated to the role that con­sump­tion is now play­ing in en­sur­ing the sta­ble, mod­er­ate growth of the world’s sec­ond-largest econ­omy.

The lat­est statis­tics show that fi­nal con­sump­tion con­trib­uted 84.7 per­cent of China’s eco­nomic growth in the first quar­ter while cap­i­tal in­vest­ments’ con­tri­bu­tion came in at 35.8 per­cent and net ex­ports of goods and ser­vices dragged growth down by 20.5 per­cent. The con­sump­tion share marked a sig­nif­i­cant jump from the 66.4-per­cent ra­tio at the end of 2015.

Although China’s econ­omy ex­panded by only 6.7 per­cent year-on-year in the first quar­ter of 2016, the slow­est since early 2009, in­di­cat­ing con­sid­er­ably strong head­winds, it is fairly re­as­sur­ing, if not sur­pris­ing, to see the rapid rise of con­sump­tion as a lead­ing growth en­gine while tra­di­tional growth driv­ers such as in­vest­ment and ex­ports are los­ing steam.

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