State-run Global Times "US Consumer Power Seriously Undermined"
5th Plenum Concludes Today... Strengthening Domestic Economy and Preparing for Hegemonic Competition with the US
"Calls for Policies to Increase Real Income"
[Asia Economy Beijing=Special Correspondent Jo Young-shin] Ahead of the closing of the Chinese Communist Party's 19th Central Committee 5th Plenary Session (5th Plenum), claims have emerged that China will surpass the United States to become the world's largest consumer market.
On the 29th, China's state-run Global Times cited Professor He Maochun of Tsinghua University's Institute of International Studies, stating, "Due to the spread of COVID-19, trade policies, and unemployment issues, the United States' consumer power has been severely damaged," and forecasted, "This year, China could surpass the U.S. to become the world's largest consumer market."
This implies that the U.S. economy will require a significant amount of time to recover due to the spread of COVID-19, resulting social unrest, and the lack of strategic leadership.
It is reported that the Chinese leadership focused on discussing responses to conflicts with the United States during this 5th Plenum.
In particular, since the global economy is struggling due to the novel coronavirus disease (COVID-19), there is a high possibility that China will pursue a sustainable growth model centered on domestic demand.
The Global Times predicted that the Chinese leadership will gradually introduce bold support measures to revitalize domestic demand. Given that the global economy is inevitably facing a significant contraction, various measures will be introduced to ensure the smooth operation of the Chinese domestic economy.
Jiang Yansheng, senior researcher at the China Center for International Economic Exchanges, said, "Previously, China focused on exports and investment, but going forward, it must rely on internal demand," adding, "This is a major change in the Chinese economy and an important factor for growth."
In fact, exports accounted for 35% of China's Gross Domestic Product (GDP) in 2006, but last year, that proportion dropped to the 17% range. Meanwhile, domestic demand has steadily increased, accounting for 80% of GDP as of last year.
The Global Times emphasized that China has a sufficient domestic market with a per capita GDP of $10,000, an urbanization rate of 60%, and a middle class of 400 million people.
Chinese experts argue that policies to increase the real income of the Chinese people are necessary to stimulate consumption.
Pan Hlin, director of the Digital Economy Research Institute at Central South University, predicted that the Chinese leadership will devise new measures to foster consumption by increasing household income and utilizing IT technology.
Zhao Ping, director of the China Council for the Promotion of International Trade, said, "The Chinese leadership will further improve the consumer environment through reforms in the income distribution system, employment policies to ensure stable disposable income, and technological self-reliance and innovation." He added, "In terms of stimulating consumption, addressing regional imbalances in education and healthcare will also be discussed at the 5th Plenum."
The meeting will also present a long-term development plan through 2035. Since there are many forecasts that China's GDP will surpass that of the United States by 2035, the discussion of the Chinese leadership's long-term development plan can be interpreted as a preparation for a long-term hegemonic competition with the U.S.
The Chinese leadership is likely to declare core technological self-reliance, low-carbon development, and expanded openness in the long-term plan through 2035, aiming to fill the gap left by the U.S. This is the first time since the 9th Five-Year Plan (1996?2000) that China has discussed a long-term development plan looking ahead 15 years.
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