China should further ease market entry to boost consumption, economist says

China can further ease the market entry to services consumption sectors while relaxing relevant price restrictions as part of efforts to create a new policy paradigm that prioritizes boosting consumption, which in turn drives investment, said a senior economist.

Wang Yiming, vice-chairman of the China Center for International Economic Exchanges, said that it is sensible to further open up access to social capital and ease price restrictions in the sectors of healthcare, elderly care and education, helping differentiate service offerings and meet the diverse needs of middle- and high-income groups.

"There's huge demand in these areas as most services in the healthcare sector are standardized," Wang said while addressing a webinar held by the China Center for International Economic Exchanges on Tuesday.

Wang is also a former deputy director of the Development Research Center of the State Council and a member of the monetary policy committee of the People's Bank of China.

"To fundamentally bolster consumption, China must accelerate the transition in its development model — from relying on investment and exports for growth to a model where the government promotes consumption, which in turn drives investment," he added.

In addition to substantially raising the fiscal deficit ratio, Wang said it is necessary to adjust the structure of fiscal spending and divert some funding traditionally used for investment to boosting consumption, calling for putting into place the policies of boosting basic pensions and medical insurance subsidies.

Wang also advocated establishing an incentive system where the central government provides fiscal subsidies for local governments that well implement the reforms that improve the basic services for rural-to-urban migrants.