State Council short of new ideas to boost consumption

On Thursday, Premier Li Qiang chaired a State Council study session focused on boosting consumption.

ICYDK: These bimonthly study sessions are used to chew over the big policy issues that keep government officials up at night.

• They are useful way to take the pulse on what policymakers are thinking.

Liu Yuanchun – President of Shanghai University of Finance and Economics and China’s most influential economic advisor – spoke at the study session.

We don’t know what Liu advocated for at the meeting, but we can take a stab based on his previous policy positions.

• In October Liu said he didn’t support short-term stimulus to boost consumption.
• Instead, he favors longer-term policy support that raises household incomes.

Li Qiang then took to the stage, waxing lyrical about increasing the supply of goods and services:

• “[We must] promote service consumption and comprehensively improve the supply of education, medical care, culture, sports, and tourism [services].”
• “[We must] relax market access for relevant industries, and increase the supply of high-quality consumption.”

Get smart: The attendance of Liu Yuanchun, and Li’s focus on boosting supply – as opposed to consumer demand – suggests policymakers may not be planning as aggressive a fiscal expansion this year as we initially thought.