If so, here's hoping Beijing gets it right.
First up, Singapore's Business Times, January 4:
China’s pledge to lift consumption sparks debate on cash handouts
CHINA’S policymakers have made it a top priority to boost consumption in the economy in 2023. Yet beyond broad pledges, they have provided little detail on specific steps to achieve that goal.
Unlike in the US and elsewhere, China is shunning the stimulus checks and consumer subsidies that fuelled post-pandemic recoveries in those economies. The government’s support has focused mainly on helping businesses cope with the slump and preserve jobs – it fears that free cash may give rise to welfare dependency and lower productivity.
The only clues so far on possible policy measures this year have come from a key economic meeting in December, where top officials listed better housing, new-energy cars and elderly-care services as areas where consumption will be encouraged. They also pledged to increase household incomes “through multiple channels”, without elaborating.
Several government-linked economists – some of whom are advisers to senior leaders – have now weighed in with their own recommendations on how best to spur spending after three years of strict Covid rules battered consumer confidence.
Some argue that consumers will feel empowered to spend only when they know their jobs and incomes are secure. Others say cash handouts are the most immediate and effective way to drive consumption when sentiment cannot be lifted quickly.
Liu Yuanchun, president of the Shanghai University of Finance and Economics, argues that although subsidising households directly with cash and coupons would stimulate consumption in the short term, there are indirect implications that could be negative for the economy.
Consumer vouchers could cause so-called consumption displacement, he wrote in December, implying reduced demand for goods that cannot be bought with the coupons, resulting in a muted effect on spending. Cash handouts in the US and Europe also led many workers there to quit their jobs and live on the payouts, pulling down economic growth, he said.
Liu previously advised the Politburo, the Communist Party’s top decision-making body, in April on how to regulate capital. He has also attended several economic seminars led by President Xi Jinping and Premier Li Keqiang.
Government aid should be targeted towards businesses this year, Liu argues, while more should be done to help the beleaguered housing market as well, given its outsized impact on the broader economy. The property sector could drive household demand on everything from home decorations to appliances, he said.
“Greater support and subsidies must be given to medium and small-sized firms in 2023, as protecting market entities is the core pre-condition of stabilising consumption and investment,” Liu wrote.
He also suggested the creation of a special employment fund targeting migrant workers and university graduates. Investment should be made in food-for-work projects that focus on job creation and can address both unemployment and insufficient investment, he added.
Jia Kang, a former head of a research institute under the Ministry of Finance, said that boosting consumption comes down to job creation, which in turn hinges on effective investment....
....MUCH MORE
And from China watcher Michael Pettis:
2/7
— Michael Pettis (@michaelxpettis) January 2, 2023
This is a major worsening of China's already bad internal imbalance, driven largely by Beijing's continued focus on supply-side policy stimulus.
The article cites Nomura's Lu Ting: “It is certain that China’s economy will rebound in 2023. The question is how much”.
If I'm reading this correctly, we have three economists and three different policy prescriptions. With more on the other side of the BT jump.
Good luck to all of us.
