Measures to spur consumption can help to overcome risks

The central authorities issued a guideline document, introducing a series of key measures to unleash people's consumption potential.

At a time of risks at home and abroad, the key to stabilizing the economy lies in unleashing the momentum of "domestic circulation". The 69.4 percent contribution of final consumption expenditure to China's economic growth in the first quarter shows how consumption is driving China's economy.

The building of a unified domestic market and promoting the establishment of unblocked logistics channels, lowering the reserve requirement ratio to release liquidity for medium, small and micro-sized enterprises in a targeted manner, and the new measures in the guidelines all demonstrate China's efficiency in responding to the COVID-19 pandemic.

The guideline document lists specific measures to boost consumption, from promoting green consumption to the establishment of duty-free shops in some cities. It also aims at promoting innovation in consumption policies, systems, technologies, and removing institutional barriers to overall consumption, to increase people's consumption ability and willingness.

The document also talks of scientifically planning and building a number of suburban warehouse bases, integrating warehousing, sorting, processing, packaging and other functions, in large and medium-sized cities to ensure timely transportation of goods and services during emergencies. Given that a disrupted transportation network during an outbreak can upset the logistics of material supplies, construction of such warehouses in major cities can ensure the timely dispatch and smooth circulation of consumer goods.

Besides, apart from the current "gray rhino" of the pandemic, one should be prepared for some unexpected "black swan" events too. The construction of such warehouses is equivalent to constructing a nationwide material reserve system, which, along with the existing market-oriented material supply and logistics distribution system, will form a "dual system" to better guarantee the supply of emergency materials.

Aside from building such multifunctional warehouse bases for the supply of materials, it is also necessary to guarantee the supply and reserve of production materials. Considering increased risks, challenges and uncertainties for China's economic development brought by the pandemic and the Ukraine crisis, the supply and reserve of production materials is related not only to the stability of the industrial chain, but also to China's national security.