Guotai Haitong Securities(SH:601211) Xin Lang Zheng Quan·2025-04-21 07:37Core Viewpoint - The article discusses the "Welfare China 2035" framework proposed by Guotai Junan Asset Management, which aims to address structural issues in China's economy as it transitions from high-speed growth to high-quality development, focusing on consumption-driven growth and improving social welfare [1][2][3]. Economic Transition - The transition in China's economy is marked by a shift from production-driven to consumption-driven growth, with final consumption expenditure consistently accounting for over 50% of GDP for the past 11 years [3]. - In 2023, final consumption accounted for 55.6% of GDP, significantly lower than developed countries like the US (81%) and Japan (75%) [3]. Income Distribution - In 2024, the proportion of per capita disposable income to GDP is projected to be 43.15%, which is still below the levels seen in developed countries [4]. - The income disparity between urban and rural residents is significant, with the urban-rural income ratio at 2.34 in 2024 [4]. Social Welfare - China's social welfare spending is low, with only 14.5% of the general public budget allocated to social security and employment, compared to 33% in Japan and 22% in the US [4][5]. - The social security system relies heavily on personal and family contributions, limiting consumption potential [5]. Structural Imbalances - The current economic model, heavily reliant on investment, is facing diminishing returns, with a capital formation rate of 41% in 2023, far exceeding the global average of 25% [6][7]. - The need for a transition to a consumption-driven economy is emphasized to address issues like manufacturing overcapacity and external trade imbalances [6][7]. "Welfare China 2035" Framework - The framework aims to innovate the distribution of national wealth, improve the social security system, and optimize the supply-demand cycle to release consumption potential [8]. - Key goals include increasing disposable income, expanding the middle-income group, and achieving social security coverage for all [9][10]. Income Distribution Reform - The reform aims to increase labor compensation in the income distribution system and explore new factors like technology and data in income distribution [11][12]. - Direct tax systems will be established to reduce the tax burden on labor compared to capital income, enhancing compensation for low- and middle-income groups [12]. Enhancing Property Income - The strategy includes measures to stabilize the stock market and increase residents' property income by facilitating long-term capital market investments [14]. - Policies will be implemented to allow rural housing transactions and mortgages, potentially generating significant property income for rural residents [16]. Welfare Initiatives - Initiatives will be introduced to enhance the sense of well-being among citizens, including childcare subsidies and improved healthcare and pension support [17]. - The goal is to reduce precautionary savings and stimulate consumption by ensuring reliable social security [17]. Conclusion - The "Welfare China 2035" strategy represents a significant shift in China's economic model, aiming to create a consumption-driven society that balances supply and demand, ultimately contributing to shared prosperity and high-quality development [18].