LBX(SH:603883) Sou Hu Cai Jing·2025-11-16 02:15Core Insights - The essence of the issue is a strong government, wealthy enterprises, and impoverished residents, leading to high mandatory savings and low income distribution for residents, which directly results in low consumption rates [2][5]. Consumption Data Comparison - China's final consumption rate is approximately 55%, while developed countries average around 80%. Government consumption accounts for 30%, but private consumption is below 70%. The share of household consumption in GDP is less than 40%, lower than the global average of 55% [3]. Consumption Growth Performance - Despite a low consumption rate, consumption growth has been significant, with an average increase of 8.24% over the past 20 years, more than three times that of the U.S. In 2024, consumption is expected to contribute 44.5% to economic growth, remaining the primary driver of China's economy [5]. Distribution Imbalance - The core issue of low consumption is linked to a decline in consumption growth, which is becoming disconnected from GDP growth. The initial distribution of national income shows that the household sector accounts for only 60.6%, which is 5.5 percentage points lower than the global average, while the corporate sector is 5.6 percentage points higher [5][7]. Social Security and Wealth Gap - The inadequacy of the social security system contributes to a persistent wealth gap, with China's Gini coefficient reflecting a modest reduction of 12%, compared to a 40% reduction in Europe. High housing prices and insufficient affordable housing force low- and middle-income individuals to allocate savings to real estate, limiting funds available for daily consumption [5][7]. Short-term Consumption Weakness - Recent years have seen a worsening of consumption shortfalls, with household income growth lagging behind nominal GDP. Despite a GDP growth of 5.2% in the first three quarters, retail sales only grew by 4.5%, indicating a weak recovery in consumption [7]. Structural Reform Recommendations - To address the consumption gap, estimated at 6% of GDP (approximately 2.9 trillion yuan annually), structural reforms are necessary rather than temporary measures like vouchers or discounts [7][8]. Six Structural Reform Directions 1. Transition the government from an investment-focused model to a service-oriented one, enhancing social security, healthcare, education, and elderly care [8]. 2. Increase the return of state-owned enterprise profits to society, preventing excessive reinvestment of profits [8]. 3. Reform income distribution to raise the share of household income in national income [8]. 4. Strengthen social security systems to alleviate the pressure of precautionary savings on residents [8]. 5. Adjust housing policies to provide more affordable housing for low- and middle-income groups [8]. 6. Restore confidence in income and asset expectations, as all three elements are essential [8]. Historical Opportunity and Fundamental Path - The current period is seen as a critical window for China to transition from a wealthy nation to one that enriches its citizens. Improving household income and restoring consumption capacity are vital for making consumption the engine of China's economic internal circulation [10].