1/7
We have to be very careful about this type of incremental thinking. An advisor to the PBoC argues that “providing migrant workers in Chinese cities with full access to local government services would boost their consumption by as much as 30 per cent.”
scmp.com/economy/china-…
We have to be very careful about this type of incremental thinking. An advisor to the PBoC argues that “providing migrant workers in Chinese cities with full access to local government services would boost their consumption by as much as 30 per cent.”
scmp.com/economy/china-…
2/7
While this might technically be true, it doesn’t necessarily follow that overall consumption would rise. In fact it is unlikely. Granting migrant workers the same legal status as local residents and giving them the same access to health, education and the social safety net...
While this might technically be true, it doesn’t necessarily follow that overall consumption would rise. In fact it is unlikely. Granting migrant workers the same legal status as local residents and giving them the same access to health, education and the social safety net...
3/7
will certainly cause them to consume more, by indirectly raising their incomes, but it effectively does so by transferring income from some other sector of the economy, and it matters a great deal which sector it is that funds the transfers.
will certainly cause them to consume more, by indirectly raising their incomes, but it effectively does so by transferring income from some other sector of the economy, and it matters a great deal which sector it is that funds the transfers.
4/7
If local governments pay for these transfers by selling off assets, there is a transfer from local governments to migrant workers, and overall consumption will rise. But because local governments are increasingly facing funding constraints, they may increase the services...
If local governments pay for these transfers by selling off assets, there is a transfer from local governments to migrant workers, and overall consumption will rise. But because local governments are increasingly facing funding constraints, they may increase the services...
5/7
they provide to migrant workers mainly by reducing services they provide to residents (which is why residents in top-tier cities are reluctant to abandon the hukou system). In that case the effective increase in migrant-worker income is matched by an equivalent decrease...
they provide to migrant workers mainly by reducing services they provide to residents (which is why residents in top-tier cities are reluctant to abandon the hukou system). In that case the effective increase in migrant-worker income is matched by an equivalent decrease...
6/7
in local-resident income. This might boost overall consumption a little (migrant workers might save a smaller share of their income than local residents), but most of the increase in migrant-worker consumption will be matched by a reduction in local-resident consumption.
in local-resident income. This might boost overall consumption a little (migrant workers might save a smaller share of their income than local residents), but most of the increase in migrant-worker consumption will be matched by a reduction in local-resident consumption.
7/7
There is no longer any point in discussing the rebalancing of income as if all that mattered was the receiving side of the equation. Rebalancing is only meaningful (and sustainable) if local governments explicitly fund the increase in household income.
There is no longer any point in discussing the rebalancing of income as if all that mattered was the receiving side of the equation. Rebalancing is only meaningful (and sustainable) if local governments explicitly fund the increase in household income.
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