(Yicai Global) March 5 -- China’s central and local governments will issue more policies to boost consumption, raise consumer confidence and encourage new ways of spending after the Two Sessions, the annual meetings of the country’s national legislature and top political advisory bodies, conclude later this month, a former vice minister of commerce told Yicai Global.

“The Chinese people's desire to spend has not been diminished amid Covid-19, only the means of consuming has changed,” said Wei Jianguo, who is also vice chairman of China Center for International Economic Exchanges.

Government support has already ensured that the economy bounced back well from the ravages of Covid-19 last year. The country’s total retail sales of consumer goods reached CNY39.2 trillion (USD6.1 trillion) in 2020, more than half of the country’s gross domestic product at 54.3 percent, and just a 3.9 percent dip from 2019.

China still leads the world in auto sales and is the globe’s biggest market for online retailing. Last year e-sales of physical goods surged by 14.8 percent from the year before and there were more than 24 million live-streamed sales shows.

Further support could put China is on track to surpass the US as the world’s biggest consumer market this year, experts said.

Equal Emphasis

It is important that both supply and demand are taken into consideration by policy makers to avoid structural imbalances, said Zhang Yunyong, general manager of carrier China Unicom’s product center and a member of the 13th National Committee of the Chinese People’s Political Consultative Conference.

“Supply and demand are like the front and rear wheels of a bicycle,” Wei said. We should always create demand with the rear wheels and steer supplies with the front ones, in order to realize high-quality growth, Wei said.

Driving up employment, increasing people’s income and investing more in the opening up of markets will all help boost demand, said Wen Bin, chief researcher at China Minsheng Bank.

“What sort of factors affect consumer confidence?” asked Wei. Is it a lack of money? Being afraid to spend? Not knowing how to use it or the unequal distribution of wealth? China should not only hike wages, but also improve the re-distribution of wealth through financial and tax-related reforms, he added.

Policymakers should tap consumer potential in the rural areas, where over half of China’s population lives, said Zhao Xiuzhong, chancellor of Shandong University of Finance and Economics. They lack the know-how of urban residents when it comes to spending. The government should increase the disposable income of rural residents and improve the social security system, he added.

Editors: Zhang Yushuo, Kim Taylor