Consumer confidence seen as driver for growth

Emerging market: Visitors walk along the Bund across the water in Shanghai. China’s social security and pension reform will have the potential to boost domestic consumption by giving people the confidence that they don’t need to save excessively. — The New York Times

Shanghai: China’s latest stimulus measures seem to create a favourable shift in focus toward relying more on boosting consumer confidence as a sustainable growth driver, with bigger fiscal spending on improving social welfare and addressing property woes necessary, says leading economists at home and abroad.

Referring to China’s key choices of continuing export-led growth policies or shifting the growth engine to consumers, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said, “As the Chinese economy has grown so big, it is the latter – domestic consumption – that is the reliable source of growth.”