President Xi Jinping said China must prioritize restoring and expanding consumer spending this year, while working harder to attract and leverage foreign investment to boost expectations and restore market confidence.
Xi stressed the importance of consumption in bolstering the economy at a key annual meeting to set the economic policy agenda for 2023, saying the government needs to “fully unleash the consumption potential” of domestic residents, according to the latest issue of the Communist Party’s flagship magazine Qiushi, which was published Thursday.
It’s necessary to boost consumer credit, he said, calling for more to be done to improve the spending power of low- and middle-income residents, who have a high propensity to spend but have taken a hit from the Covid-19 pandemic.
Xi made the remarks at the closed-door Central Economic Work Conference in December, days after Beijing abandoned its “zero-Covid” policy, which took a heavy toll on the world’s second-largest economy. That month, the state-run Xinhua News Agency published a report on the meeting that disclosed part of his speech.
Boosting domestic consumption is important for China’s post-pandemic recovery as demand from the world’s three largest importers of Chinese goods — the U.S., the EU and Southeast Asia — has weakened as high inflation weighs on global consumers’ purchasing power.
Xi noted exports should continue to play a role in supporting the economy, and the government needs to stabilize shipments to developed countries and expand those to emerging economies, according to the Qiushi article.
He also asked the government to put more effort into attracting and utilizing foreign investment.
The country should expand market access by, for example, reasonably reducing the number of foreign investors currently restricted or prohibited from entering the domestic market, Xi said.
It should also provide “maximum convenience” for foreign investors to engage in trade and investment negotiations in China, while allowing domestic economic and trade personnel to regularly travel overseas to attract investment, the president said.
Foreign businesses slowed their investments or even pulled money out of China last year as a housing slump and the government’s stringent virus controls caused economic growth to slow to its second-lowest rate since the 1970s, Bloomberg reported. Rising geopolitical tensions added to the uncertainty, and the amount of new utilized foreign direct investment in both November and December fell more than 20% below the same months in 2021, data from the Ministry of Commerce showed, according to the report.
Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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