David Daokui Li says China’s decision makers have finally come around to stimulating domestic consumption rather than investment, and for that Beijing will provide more welfare.

The Communist Party of China has said the upcoming Third Plenary Session of its current 20th Central Committee will focus on “deepening comprehensive reform to advance Chinese modernisation.” Based on past practice and some recent public reports, Beijing is drafting its agenda now, but details are hard to come by.

David Daokui Li last Friday (June 7) told guests at a luncheon hosted by the Centre for China and Globalisation (CCG) that “a huge and super important central Party committee conference will come in July…I’m sure major policies and major policy directions will be announced.”

Li, professor of economics at Tsinghua University, Director of its Academic Center for Chinese Economic Practice and Thinking (ACCEPT), says he wasn’t citing any inside sources in his elaboration, but the former member of the Monetary Policy Committee of China’s central bank insists that after years of emphasising the domestic investment part of domestic demand, Beijing has finally come around to the conclusion that domestic consumption is the key to stimulate domestic demand.

Li says that Chinese leader Xi Jinping’s recent vow to make sure that the population can benefit directly from the measures that will be rolled out in the Third Plenary Session of the Communist Party of China’s 20th Central Committee means Beijing will provide more welfare to its citizens.

Xi had said in a symposium in Jinan, Shandong in late May

Economic system reform should start from meeting realistic needs and tackling the most urgent matters, and should advance theoretical and institutional innovation in the process of solving practical problems, he added.

“The Chinese people’s aspiration for a better life is the goal we have been striving for, and the ultimate purpose of advancing reform and promoting development is to improve the livelihood of the people,” Xi said.

He emphasised the need to identify the key areas of reform and achieve breakthroughs based on the pressing concerns and aspirations of the general public, including employment, income growth, education, healthcare, housing, government services, childcare, elderly care, personal safety, and property security.

Below are what Li said at the luncheon

So what are the likely and tangible policies put in place to deal with all three problems? Well, let’s talk about them one by one.

For the property market, the key is twofold.

1. Get rid of the restrictions on housing purchases.

Under the previous restrictions on housing purchase, you are not allowed to buy a piece of property in Beijing as a foreigner, or as a resident from other cities. These kinds of things were useful 12 years ago, in 2012 when the property market was super hot. I argued for that. I supported the policy of housing restrictions. I was blamed and even hated by my fellow economists.

But today’s situation is totally different. China is getting rid of housing purchasing restrictions city by city, Hangzhou, Xi’an. In Shenzhen, I think the large apartments are now free to trade. This is number one: to lift restrictions on housing demand. As I said, still, 50% of the population will have to buy a new piece of property to live in cities.

2. Provide........

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