China Should Cut Inefficient Investment, Boost Consumption

Authorities should comprehensively examine excess and inefficient investments totalling over CNY20 trillion every year, and reallocate these fiscal funds to increase resident income, improve social security and subsidise consumer spending to help achieve over 5% economic growth in 2024, said Teng Tai, president at Wanbo New Economic Research Institute. The current multiplier effect of each unit of fiscal spending on investment is less than one, but the effect is greater than three if it is used to issue consumer coupons, said Teng. It requires reforms of the government's decision-making and execution mechanisms to achieve the shift from an investment-driven to a consumption-driven economy, Teng added.