China’s economists weigh pros and cons of consumption benchmarks

As Beijing gathers public input on China’s next five-year plan – a mission statement for the next half-decade of economic and social policy – how best to bolster domestic consumption has emerged as a topic of considerable debate as the country seeks new avenues for growth amid a murky landscape for global trade.

One point of contention among scholars and other influential thinkers is whether to set measurable consumption targets, in a similar fashion to other headline benchmarks like gross domestic product growth.

Some have called for indicators such as the household consumption rate – the share of consumer spending in GDP – to be written into the blueprint, while others argue that such metrics are not operationally feasible as policy goals.

Among those in favour is Chang Xiuze, an economist with the Academy of Macroeconomic Research under the National Development and Reform Commission – the country’s top economic planner – who has made this proposal on various occasions.

“From the perspective of the national strategy to expand domestic demand and the lives of ordinary people, could the ‘household consumption rate’ be listed separately in the 15th five-year plan as a national ‘monitoring and assessment indicator’?” he wrote after a research trip to the northeastern province of Liaoning in June.

In the note, compiled last month by the China Academy of Northeast Revitalisation think tank – where Chang serves as deputy director of the expert committee – he noted China’s household consumption rate was a “low” 39.6 per cent in 2023.

Similarly, Jin Keyu, a professor at Hong Kong University of Science and Technology’s school of business and management, said it would be “fantastic” if consumption became a “yardstick” for local governments to use as a measurement of success at a World Economic Forum event in June.

South China Morning Post