Better services for migrants may fuel growth in consumption
Source: Agencies |
August 21, 2012, Tuesday
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Print Edition
Print Edition
CHINA'S domestic migrant labor force could power consumer spending growth in the world's second-biggest economy if workers had better access to basic welfare services in the cities where they live and work, according to a new government report.
The 230 million-strong migrant work force drives China's economy, but a lack of access to education, health and other services tied to the country's strict household registration - or hukou - system forces massive saving, restraining the country's efforts to shift growth's focus to consumption from investment.
"Giving the migrant population living in cities permanent status and giving them equal access to fundamental public services would greatly stimulate China's consumption growth," the National Population and Family Planning Commission said in its latest annual report.
Consumption-driven growth is seen by economists as a more stable development model for China than the investment-driven path trodden so far, which the International Monetary Fund said stokes overcapacity and inefficiency.
China sees the rise of consumers as the key driver of growth for a generation to come in the wake of the massive urbanization of the last three decades that lifted an estimated 600 million people from poverty and turned China's export-focused factories into the new workshops of the world.
China's migrant workers in their millions flood into cities each year from the impoverished countryside. They are relatively low paid, but have earned annual double-digit pay rises for years, making them a huge potential source of consumer spending.
Migrant workers spent an average of 56 percent of the salary increases they earned in 2011, according to data in the report. It showed that monthly spending per capita rose by 230 yuan (US$36) in 2011 from a year ago based on average pay increase of 406 yuan to 2,253 yuan a month.
Migrant workers living in any given city for one year spent 1,761 yuan on average, rising to 2,609 yuan if they stayed for five years or longer, the report found.
The report found only 23.1 percent of Chinese migrant workers had pension insurance in the city in which they lived in 2011, 13.6 percent of them were covered by jobless insurance and 64.3 percent had medical insurance.
That forces migrants into precautionary saving to pay market rates for services in cities.
City dwellers covered for six basic welfare services typically spend 1.4 times as much as those who are not, data in the report showed.
The 230 million-strong migrant work force drives China's economy, but a lack of access to education, health and other services tied to the country's strict household registration - or hukou - system forces massive saving, restraining the country's efforts to shift growth's focus to consumption from investment.
"Giving the migrant population living in cities permanent status and giving them equal access to fundamental public services would greatly stimulate China's consumption growth," the National Population and Family Planning Commission said in its latest annual report.
Consumption-driven growth is seen by economists as a more stable development model for China than the investment-driven path trodden so far, which the International Monetary Fund said stokes overcapacity and inefficiency.
China sees the rise of consumers as the key driver of growth for a generation to come in the wake of the massive urbanization of the last three decades that lifted an estimated 600 million people from poverty and turned China's export-focused factories into the new workshops of the world.
China's migrant workers in their millions flood into cities each year from the impoverished countryside. They are relatively low paid, but have earned annual double-digit pay rises for years, making them a huge potential source of consumer spending.
Migrant workers spent an average of 56 percent of the salary increases they earned in 2011, according to data in the report. It showed that monthly spending per capita rose by 230 yuan (US$36) in 2011 from a year ago based on average pay increase of 406 yuan to 2,253 yuan a month.
Migrant workers living in any given city for one year spent 1,761 yuan on average, rising to 2,609 yuan if they stayed for five years or longer, the report found.
The report found only 23.1 percent of Chinese migrant workers had pension insurance in the city in which they lived in 2011, 13.6 percent of them were covered by jobless insurance and 64.3 percent had medical insurance.
That forces migrants into precautionary saving to pay market rates for services in cities.
City dwellers covered for six basic welfare services typically spend 1.4 times as much as those who are not, data in the report showed.
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