As a growing trade surplus highlights the need for China to boost its domestic demand, scholars at a Peking University seminar suggested enhancing the country’s social safety net and increasing investment in public service to build a foundation for higher consumption.
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Beijing has unveiled several initiatives to encourage demand, including a 30-point plan published on Sunday, to counteract tariffs and export restrictions levied by the US to correct the surplus its president and other officials have labelled as unfair.
To address the imbalance in trade, “the ultimate solution is to boost domestic demand and consumption,” said Lu Feng, a professor of economics at the university’s National School of Development, during the Sunday seminar.
“By doing so, a significant portion of domestically produced goods can be consumed within the country, which would also enable a higher volume of imports.”
China’s trade surplus reached a record high of nearly US$1 trillion last year.
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Lu pointed out that China must realign the structure of its public resource allocation, which has historically been heavily skewed towards the supply side.
There should be a greater emphasis on supporting livelihoods, he said, with particular attention to low-income groups.