Summary of Key Points
The current economy in our country is facing a structural issue where "supply is strong while demand is weak," and consumption's role in driving the economy has fallen short of expectations. The root cause lies in the slow growth of residents' incomes (the actual growth rate of residents' income in the first half of the year was 0.5 percentage points lower than GDP) and a decline in their propensity to consume (the lowest since 2023). Therefore, it is recommended to establish an income increase plan for urban and rural residents, with the goal of ensuring that the growth rate of residents' incomes does not fall below that of the economy. This can be achieved by increasing wage income, transfer net income, and property net income, thereby narrowing the gap between urban and rural areas and ultimately boosting consumption and promoting a healthy economic cycle.
1. Why Implement an Income Increase Plan for Urban and Rural Residents?
Consumption is not sufficient to drive the economy, as income growth is lagging behind. The economic growth rate slowed down in the first half of this year, with both consumption and investment playing a weaker role, although external demand has been slightly better. However, consumption acts as the "ballast stone" of the economy. The main reasons for the weak consumer demand are that residents either do not have enough money to spend or are hesitant to spend:
- Slow Income Growth: The actual per capita disposable income of residents increased by 4.2% in the first half of the year, which is 0.5 percentage points lower than GDP's growth rate of 4.7%, indicating that economic growth has not fully translated into increased residents' incomes.
- Low Consumption Intent: For every 100 yuan earned, residents spend only 64.6 yuan, which is 1 yuan less than last year and the lowest level since 2023.
- Japan's Experience: In the 1960s, Japan implemented a "National Income Doubling Plan," doubling its economy in just 7 years and creating 100 million middle-class consumers, significantly boosting consumer power. Our plan focuses on "disposable income," which has a more direct impact on consumption, with the goal of ensuring that the growth rate of residents' incomes does not fall below that of GDP, placing more emphasis on the needs of ordinary people.
2. Wage Income: Employment is Fundamental, but We Also Need to Address Issues of Unemployment
Wage income accounts for 56.6% of residents' total income and is the primary source of earnings. To increase wages, stable employment must be ensured:
- Employment Stability: Maintain jobs in labor-intensive industries (such as manufacturing and services) and support key groups (university graduates, migrant workers) in finding employment.
- Resolving Contradictions: There is a problem of "structural unemployment"—job opportunities in areas like delivery and ride-hailing services are saturated (with declining incomes), while high-tech manufacturing and the digital economy struggle to find enough workers. Solutions include providing large-scale skills training (to help those without jobs acquire the necessary skills for available positions), reforming higher education to align with market demands, and protecting the rights of flexible workers (such as providing social security for delivery personnel).
- Wage Increases: Improve the minimum wage system and encourage companies to raise wages reasonably. The government can also support this by creating job opportunities through public works projects (e.g., hiring local residents for road construction).
3. Transfer Net Income: More Than Just Consumer Coupons
Transfer net income refers to money provided by the government (such as pensions, social security benefits, and subsidies), which accounts for 18.6% of residents' total income. To increase this portion of income, we cannot rely solely on one-time consumer coupons:
- The Effect of Consumer Coupons: Hong Kong has issued consumer coupons for three years in a row, but its economy did not return to 2019 levels until 2024. This is because one-time subsidies only deplete future consumption potential; residents value "permanent income" (such as regular pension payments) more.
- Social Security is Key: Accelerate the improvement of social security systems by extending compulsory education, increasing basic pensions, providing affordable housing, and optimizing family policies to reduce the burden of raising children. This will allow residents to spend more without having to save too much for emergencies.
- Where Does the Money Come From?: Deepen fiscal and tax reforms (e.g., requiring state-owned enterprises to contribute more profits) and clarify the distribution of financial resources between the central and local governments to ensure sufficient funds for social security subsidies.
4. Property Net Income: A Steady Approach to Narrowing the Urban-Rural Gap
Property net income (from interest, rent, and stock dividends) accounts for only 8% of residents' total income, which is 12 percentage points lower than in the United States. However, this cannot be addressed immediately:
- Increasing Property Income: The focus should be on reforming the capital market, such as encouraging listed companies to distribute more dividends (to benefit stockholders) and stabilizing the real estate market (to protect residents' property values). Short-term gains from stock trading or real estate speculation are not expected to be significant.
- Narrowing the Urban-Rural Gap: Rural residents have a higher propensity to consume (82.8% of their earnings are spent compared to 63% in cities), but their incomes are lower (the urban-rural income gap is 2.31 times). Solutions include revitalizing unused rural land and houses for rental (to generate property income) and tilting social security policies in favor of rural areas to make up for past disparities.
Conclusion
The income increase plan for urban and rural residents is not just about distributing money; it involves multiple approaches, including employment, social security, and balanced regional development, to ensure that residents' incomes grow alongside the economy. This will not only boost the current economy but also lay a solid foundation for the next five-year development plan (the "15th Five-Year Plan").