Household consumption seen rising

CHINA’S household consumption is expected to rise steadily in the second half of the year, international investment bank UBS said yesterday.

The rising domestic consumption is expected to be supported by the steady rise of disposable income per capita in China, which expanded 6.6 percent year on year in January to June, according to a UBS report.

China’s consumption showed ample resilience despite trade friction in the first half, with final consumption contributing to 78.5 percent of GDP growth, up from 58.8 percent last year, according to the National Bureau of Statistics.

In terms of possible policy adjustment, UBS economist Wang Tao forecast that loosening real estate policy would not be the top choice for the government due to worries about housing bubbles and related financial risks.

Instead, it is more likely that the government will increase the supply of houses in the market such as by building more public rental houses to boost the real estate market while avoiding speculation.

The government is dedicated to curbing rising house prices this year. In June, house prices in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen were stable compared with the prices in May, according to the NBS.

Wang said the possibility that China’s GDP would be dragged down by trade disputes was relatively small in 2018, since the 10 percent tariffs on US$200 billion of Chinese products would not come into effect before September.

Wang said that China’s GDP was expected to expand 6.5 percent in 2018, consistent with the government’s target.