Fueling consumption to boost sustainable growth

Editor's Note: New consumption is growing in China's consumer market but traditional consumption remains sluggish. In a recent interview with ThePaper.cn, Jin Keyu, professor of finance at Hong Kong University of Science and Technology, emphasized that for China to become a prosperous nation, it must transform into a consumption-driven economy. She proposed boosting consumption through the following measures: Increasing labor income, redirecting fiscal support toward households, developing the service sector, reforming the tax system and strengthening social security. Following are excerpts from the interview. The views don't necessarily represent those of China Daily.

Although total retail sales in China reached 48.8 trillion yuan ($6.79 trillion) in 2024, year-on-year growth was a modest 3.5 percent. Final consumption accounted for just 55.7 percent of GDP in 2023, significantly below the 80 percent range typical of developed economies.

This imbalance largely stems from an overemphasis on production and investment over a certain period of time during which household income growth and the development of the consumption environment in some places have lagged behind the overall economic growth on average.