The potential of China’s domestic demand lies in new urbanization, which can multiply investment and accelerate consumption demand, a government official said at a forum on China’s urbanization in Beijing on September 25.
“It is estimated that about 10 million people move to cities for employment and living every year,” Wu Yuetao, an official with the National Development and Reform Commission, said. “It will generate huge investment demand for infrastructure, public service facilities and housing.”
Wu also said there are 135 million migrant workers whose per-capita consumption is much lower than that of urban residents. “If they can settle down in cities, more than hundreds of billions of yuan in consumption will be generated,” he added.
According to Cai Fang, deputy head of the Chinese Academy of Social Sciences, while China’s GDP accounts for 16.3 percent of the world’s, its final consumption is only 12.1 percent of the global volume.
“If the proportion of GDP and consumption can reach the same level, we will have 4 percentage points to tap, which will be significant for China’s economy,” Cai remarked.
He said a crucial way to increase people’s income, which is closely associated with their consumption, in tandem with China’s GDP growth is through urbanization.
However, this is a new type of urbanization, focusing on transforming migrant workers into city residents. It means not just working in cities for some time but becoming full-fledged permanent residents.
Industry insiders estimate that if migrant workers are given permanent urban residency, even if their income doesn’t rise, they will still increase their consumption by 27 percent due to the sense of belonging and confidence in their future.
