CHINA should shift the focus of its stimulus from investment to consumption and further loosen urban residency curbs to boost migrant workers’ spending power, a central bank policy adviser said.

“The target of our stimulus should shift from investment to consumption, which can more directly correspond to our actual economic bottlenecks and weaknesses,” Cai Fang, an adviser to the People’s Bank of China, said at a business forum on the weekend, according to a transcript of his speech.

Reforms of China’s system on residence permits, or “hukou”, will boost the consumption for 180 million rural migrant workers who had entered cities, said Cai, who is also an influential economist at the Chinese Academy of Social Sciences, a top State think tank.

That could lift migrant workers’ spending by more than 2 trillion yuan (US$276.59 billion), he said.

China has been pushing reforms to gradually loosen its grip on urban residence permits — in place since the 1950s — to support urbanization. The residence permit have been criticized for impeding internal migration and widening the urban-rural divide. (SD-Agencies)