Reg­u­la­tory ob­sta­cles may hin­der China’s con­sumer-led growth

China Daily (USA) - - VIEWS - The au­thor is a se­nior writer with China Daily. zhuqi­wen@chi­nadaily.com.cn

Do­mes­tic con­sumers have ex­plic­itly demon­strated their ris­ing power as a key driv­ing force be­hind the Chi­nese econ­omy by trav­el­ling and spend­ing madly across the coun­try dur­ing the week­long Na­tional Day hol­i­day that be­gan on Oct 1.

But some re­cent con­fus­ing reg­u­la­tory at­tempts by lo­cal gov­ern­ments on is­sues closely re­lated to con­sumer en­thu­si­asm in­di­cate that pol­i­cy­mak­ers have yet to fully rec­og­nize the ne­ces­sity of re­leas­ing the tremen­dous po­ten­tial of Chi­nese con­sumers.

Ac­cord­ing to the China Na­tional Tourism Ad­min­is­tra­tion, nearly 600 mil­lion peo­ple vis­ited tourist at­trac­tions around the coun­try and spent about 500 bil­lion yuan ($74.97 bil­lion) dur­ing the hol­i­day, up 12.8 per­cent and 14.4 per­cent re­spec­tively year-on-year.

Dou­ble-digit con­sump­tion growth is noth­ing un­usual in this coun­try, but it is re­mark­able when the world’s sec­ond largest econ­omy’s growth has slowed, to 6.7 per­cent in the first half of this year, amid huge un­cer­tain­ties at home and abroad. Be­cause of such strong con­sump­tion growth mo­men­tum and po­ten­tial, it is no sur­prise that some peo­ple have even called for the gov­ern­ment to in­tro­duce more such week­long hol­i­days.

Clearly, if the coun­try is to press ahead with its eco­nomic trans­for­ma­tion to­wards more sus­tain­able con­sumer-led growth, pol­i­cy­mak­ers should make most of the cur­rent con­sumer en­thu­si­asm with all avail­able means.

Clearly, if the coun­try is to press ahead with its eco­nomic trans­for­ma­tion to­wards more sus­tain­able con­sumer-led growth, pol­i­cy­mak­ers should make most of the cur­rent con­sumer en­thu­si­asm with all avail­able means.

A slew of re­stric­tions that lo­cal gov­ern­ments have is­sued since the end of last month to cool red-hot hous­ing mar­kets are a needed ef­fort to dis­suade Chi­nese fam­i­lies from pump­ing too much of their wealth into the real es­tate mar­ket. Given that al­most all the new loans is­sued by do­mes­tic banks went to the prop­erty sec­tor in July at the ex­pense of the fi­nanc­ing needs of all other eco­nomic sec­tors, it is not hard to guess the huge pres­sure soaring hous­ing prices are im­pos­ing on the fi­nances of those fam­i­lies which have ei­ther stretched to buy a newhome or saved ev­ery penny for the down pay­ment on a prop­erty.

Though such ef­forts to reg­u­late the red­hot prop­erty mar­ket are not a di­rect boost to con­sump­tion growth, they do not hurt con­sumer en­thu­si­asm.

But some cities’ reg­u­la­tory at­tempts to sig­nif­i­cantly raise the thresh­old for carhail­ing ser­vices right af­ter the week­long hol­i­day can hardly be deemed con­sumer­friendly.

The trans­port au­thor­i­ties in Beijing, Shang­hai, Guangzhou and Shen­zhen, the four most de­vel­oped cities in China, sep­a­rately is­sued draft lo­cal reg­u­la­tions on car-hail­ing ser­vices that re­quire driv­ers to have com­pul­sory in­sur­ance, as well as lo­cal house­hold reg­is­tra­tions and car plates, and put re­stric­tions on the type and age of ve­hi­cles that can be used. Some of th­ese reg­u­la­tions are so tough that it is al­leged that more than 90 per­cent of 400,000 driv­ers who are pro­vid­ing such ser­vices in Shang­hai will be forced to stop.

As a car-owner in Beijing, I have of­ten left my car at home in fa­vor of a con­ve­nient and cost-ef­fi­cient car-hail­ing ride. But what has re­ally im­pressed me is the abil­ity of the car-hail­ing ser­vice providers to re­spond swiftly to surg­ing de­mand, as I wit­nessed when I trav­elled in other cities dur­ing the past Na­tional Day hol­i­day. As the world’s most pop­u­lous coun­try, it has long been a case of “peo­ple moun­tain, peo­ple sea” at al­most ev­ery tourist site dur­ing pub­lic hol­i­days. Many years of failed or un­happy ex­pe­ri­ences try­ing to call taxi at those mo­ments did not stop me try­ing again this year. But al­though I still failed to call a taxi on sev­eral oc­ca­sions, I was able to get the trans­port I re­quired through on­line car-hail­ing plat­forms, which made this year’s hol­i­day much eas­ier than ex­pected.

How­ever, such con­ve­nient trans­port may come to an end soon if the draft laws are in­tro­duced.

As travel and tourism be­come an in­creas­ingly big­ger part of con­sump­tion­led growth, pol­i­cy­mak­ers should tilt the reg­u­la­tory see saw in fa­vor of, not against, Chi­nese con­sumers.

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