AN adviser to China’s central bank said the top priority of policymakers needs to be stimulating household consumption.

“The most urgent goal now is to stimulate household consumption, and it is necessary to use all reasonable, legally compliant and economic channels to put money in residents’ pockets,” said Cai Fang, a member of the monetary policy committee at the People’s Bank of China.

Cai added in the article posted late Monday on a social media account of the China Finance 40 Forum, one of the nation’s top economic think tanks, that continued unemployment in the wake of the pandemic is crimping household spending and that consumer confidence is expected to weaken without new policies.

Cai is among a group of economists who have called for providing direct stimulus to consumers to boost spending, an approach that the government has so far been unwilling to take.

Earlier this year, Cai said direct stimulus of 4 trillion yuan (US$551 billion) paid directly to Chinese households is an option to spur a recovery in consumer spending that has been slowed by weak wage growth during the pandemic.

In July, Cai called on the government to reform its household registration system to unleash the consumption potential of its large pool of migrant workers.

Authorities have so far indicated they are not seriously considering handing out cash straight to consumers. Then Premier Li Keqiang said last year that tax and fee cuts for companies were the most “direct, fair and efficient” way to stimulate the economy, as opposed to consumer vouchers and large-scale investment — underscoring a preference to help employers instead of giving cash directly to individuals.

Official data released yesterday showed the country’s economic recovery is slowing. Industrial production increased 3.7% in July from a year earlier, lower than the 4.3% median estimate in a Bloomberg survey of economists, while retail sales growth slowed to 2.5%, worse than the median forecast of 4%.

Latest lending data showing new loans plunging to a 14-year low in July spurred calls for more monetary easing, including a reduction in the amount of cash banks must hold in reserves.

Also late Monday, domestic media reported that the central bank plans to boost bond and asset-backed securities sales by consumer and automobile finance companies.

Eight such firms are expected to sell a combined 50 billion yuan in bonds and the securities in the near future, according to an unidentified person close to the central bank. (SD-Agencies)