CHINA will be looking to tweak its economic policies to get consumers to spend more, policy advisers in Beijing said after retail sales emerged as a weak spot in better-than-expected gross domestic product (GDP) data, underlining the need for reform.

They said that while supporting employment was key in the short run, reforms to help fatten ordinary people’s wallets were needed to boost domestic spending, a priority for President Xi Jinping’s “dual circulation” strategy to cut China’s reliance on overseas markets.

“We need to discuss ways to boost incomes,” said Yao Jingyuan, an adviser to the State Council, or Cabinet. “Who doesn’t spend if they’re rich?”

Allowing more migration to cities, increasing the minimum wage, and easing restrictions like one on the sale of cars in big metros could be some of the policy initiatives to be considered, the advisers said.

China’s economy grew 2.3 percent in 2020, according to official data this week, making it likely the only major economy that expanded last year.

But retail sales fell 3.9 percent over the full year, marking the first contraction since 1968, and final consumption dragged on growth for the first time in at least four decades, the data showed.

Worryingly for policymakers, retail sales rose just 4.6 percent year on year in December, missing expectations and slowing for the first time since steadily accelerating from the pandemic-induced slump the previous winter.

Incomes from catering fell by 16.6 percent in 2020, and people’s average spending on education, culture and entertainment dropped by nearly a fifth.

Lost wages, more saving, job losses, and continued fears over COVID-19 accounted for much of the sluggish consumption, analysts said.

They warned that if sustained, the slowdown could drag on economic recovery and jeopardize goals to rebalance the economy away from wasteful infrastructure investment.

Officials tout the vast potential of China’s market — 1.4 billion people strong, with 400 million middle class consumers — but many of them have become wary amid the pandemic, building up precautionary savings.

Policy advisers said that to boost consumption, incomes need to go up, and for that, jobs are key. (SD-Agencies)