Core Viewpoint - The current consumption shortfall in China is a structural deviation that requires investment policies and funding to stimulate consumption and create new momentum for stable growth and transformation [2][3][4]. Consumption Shortfall - China's economic recovery faces severe challenges due to insufficient demand, primarily stemming from low consumption rather than investment [3]. - The consumption rate in China is comparatively low, indicating a structural deviation, particularly in service consumption related to education, healthcare, housing, social security, and elderly care [3][4]. - The largest gap in consumption is found among rural residents, especially among nearly 300 million migrant workers and 200 million rural workers who have moved to cities [3][4]. Concept of "Terminal Demand" - The concept of "terminal demand" combines consumption and non-productive investment, focusing on real estate and infrastructure related to people's livelihoods [4]. - Historical rapid growth in real estate and infrastructure has led to overextension, contributing to current economic challenges such as low prices and nominal growth below actual growth [4][5]. Policy Recommendations - Investment policies should focus on stimulating consumption to address the low consumption ratio, aiming to raise the consumption share of GDP to a reasonable level as a hard task for stable growth [8][9]. - Structural reforms should target low-income groups to enhance their consumption capacity, particularly in essential service sectors [9][10]. Structural Reforms - Three key areas for structural reform include: 1. Addressing housing shortages for migrant workers by allowing local governments to use special bonds to acquire unsold housing for affordable housing projects [10]. 2. Reforming the pension system to ensure coverage for all residents, aiming to gradually increase pension income to 1,000 yuan/month over five years [11][12]. 3. Promoting a second wave of urbanization by facilitating the smooth flow of production factors between urban and rural areas, targeting the development of small and medium-sized towns [13].

Core Viewpoint - The article emphasizes the significant issue of insufficient consumption in China, highlighting that household consumption, final consumption, and service consumption as a percentage of GDP are notably lower compared to OECD countries, with a gap of approximately 25% to 33% [3][4][5]. Group 1: Structural Bias in Consumption - China's consumption deficit is characterized as a "structural bias," with actual final consumption as a percentage of GDP being about 20 percentage points lower than the global average [5][6]. - Four main reasons for this structural bias are identified: low overall level of basic public services, lagging urbanization quality, significant income disparity, and the characteristics of the government balance sheet [5][6][7]. Group 2: Causes of Insufficient Consumption - The low level of basic public services, particularly in education, healthcare, and social security, restricts the growth of development-oriented consumption [6][7]. - Urbanization in China is at approximately 67%, which is lower than the 70%-80% seen in OECD countries at similar development stages, impacting service consumption levels [6][7]. - Income inequality, with a Gini coefficient generally above 0.45, limits the consumption capacity of lower-income groups, while the middle-income group is not large enough to drive demand [6][7]. - The government balance sheet shows a high proportion of government wealth compared to total societal wealth, which affects consumption rates negatively [7]. Group 3: Identifying Key Issues in Consumption - The article stresses the need to focus on service consumption, particularly in education, healthcare, housing, social security, and pensions, as the main areas of insufficient consumption [10]. - The urban-rural divide is highlighted, with rural residents facing the most significant consumption gaps, particularly among migrant workers [10][11]. - Structural reforms aimed at urbanization and rural integration are necessary to address these consumption issues [10][11]. Group 4: Addressing Consumption Deficits - The article suggests that addressing consumption deficits requires distinguishing between root causes and derived issues, emphasizing the need to focus on the structural underrepresentation of consumption in terminal demand [12][13]. - It argues for a shift in policy focus from investment-driven growth to consumption-driven growth, which is essential for sustainable economic development [12][13]. Group 5: Recommendations for Pension Reform - The article proposes reforms to rural residents' pension systems as a short-term measure to boost consumption, suggesting the allocation of stimulus funds to increase pension payouts significantly [16][17]. - It discusses the potential for reallocating state-owned capital to enhance pension funds, which could double or even triple pension levels, thereby increasing consumption capacity among low-income groups [17][18]. - The goal is to raise rural pension levels to around 600-1000 yuan over five years, which could lead to substantial increases in direct consumption and overall GDP growth [19][20].

Core Viewpoint - The article emphasizes the significant structural deviation in China's consumption, which is approximately 20 percentage points lower than the global average, indicating a pressing need for reforms to boost consumption and improve living standards [3][4][10]. Group 1: Causes of Consumption Insufficiency - China's household consumption, final consumption, and service consumption as a percentage of GDP are significantly lower compared to OECD countries, with a gap of 25% to 33% [3][4]. - The low level of basic public services and the large urban-rural gap are major contributors to this structural deviation, affecting the growth of service consumption [4][5]. - Urbanization levels in China are lagging, with a current urbanization rate of about 67%, compared to 70%-80% in OECD countries at a similar development stage [5][6]. - The significant income disparity, with a Gini coefficient above 0.45, limits the consumption capacity of lower-income groups, while the middle-income group is not large enough to drive demand [6][7]. - The characteristics of the government’s balance sheet, with a high proportion of government wealth compared to total societal wealth, contribute to high savings rates and low consumption [6][8]. Group 2: Solutions to Consumption Insufficiency - Addressing consumption insufficiency requires a focus on service consumption, particularly in education, healthcare, housing, social security, and pensions [7][9]. - The structural issues stemming from the urban-rural divide must be addressed through reforms aimed at equal rights and urban-rural integration [7][9]. - The decline in real estate and infrastructure investment has exposed the underlying structural consumption issues, necessitating urgent action to boost terminal demand [8][9]. Group 3: Specific Recommendations for Pension Reform - The government should prioritize pension reforms for rural residents, as they represent a significant portion of the low-income population with high consumption potential [11][12]. - Allocating a portion of stimulus funds to increase pension payouts could significantly enhance the consumption capacity of rural residents [12][13]. - Improving the pension contribution system, especially for migrant workers, is essential to increase their future consumption capabilities [15][16].