Child Policy Easing Will Impact Consumption: Jin

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Nov. 18 (Bloomberg) -- Keyu Jin, Lecturer at The London School of Economics & Political Science, discusses political reform in China and the effect on its economy. She speaks on Bloomberg Television's “The Pulse.” (Source: Bloomberg)


To be implemented, they need a strong leader.

Is this the time where business reforms will be able to be pushed through?

I believe so.

The forms are long overdue.

People are becoming increasingly patient about the delays of the reforms.

I think the credibility of the government, the new leadership, will rest on its ability to implement.

We are looking at a command economy in many ways that wants to be a full-fledged market economy.

There seems to be a number of theoretical inconsistencies with what the chinese are going to do.

When does that tension start to manifest itself?

That particular attention will be the biggest challenge to the implementation of the reforms because you will have a lot of interest groups, large government institutions who will come up with all sorts of reasons and excuses for why that reform cannot be or should not be done.

We are going to see a lot of that.

Again, with a strong leader like xi jinpeng, his credibility is put on the front line.

I think there will be progress made.

If we look at some of the reforms that have been talked about and we have had a little bit more details, is the one- child policy abandonment the bigger one?

Is he going to give china an extra edge, boost consumption?

I think the one child policy does have important economic consequences and the loosening of the policy will also exert its impact.

In particular on an suction and lowering savings.

Right now, education expenditure per child amounts to seven percent of all household expenditures.

You can imagine that increasing the number of children from one child to two will boost consumption expenditures and lower household savings.

I think that will boost consumption and stimulate the economy.

How is the aging population and demographic problem for china?

How start of a story were they looking at?

We are talking about aging really peaking at 30 years time.

The loosening of the policy will, to a certain extent, relieve some of these aging issues.

I want to say that, in china, what is important is labor productivity, not just labor force growth.

They have got to be educated.

The one-child policy generation are 40% more educated than the previous generation.

It is about capital accumulation and labor productivity that will compensate for that.

Are we going to see more organization and how significant is that for the economy?

That is part of the reform program as well.

Some of the beneficiaries will be the rural population.

They will have better rights and be better protected for their land and land reform.

They will be able to reap some gains from a land price appreciation and they can use that as collateral to finance.

The rural population is a focus and there is a political undertone.

Xi jinpeng wants to gain popularity among the rural population.

You are looking at a much more influential china.

Bigger china, bigger population.

The most important trading partner or the largest trade still happens within the asian region.

It is a lot about regional integration as well.

Regional integration requires a leader of some sort.

I think japan being that one would be somewhat disputed as well.

Japan would step forward in terms of that leadership.

Reform is not just about domestic policy, but also opening up and being more integrated.

Reform and opening up.

It is that part of becoming more integrated, especially in the regional economy.

The world economy relies so much on china.

It shifts from china savings to consumption.

Is this going to significantly accelerate when we will see a more liberal china that consumes much more?

Part of the emphasis or the neglect of the part of the economy is on household.

Because households cannot borrow, there are significant constraints on the household.

The young consumers want to borrow to finance their education.

There has been a lot of focus on financing for firms, but not enough emphasis on households.

We are talking about introducing credit cards, being able to have mortgages for housing and purchasing large durables.

That has not arrived in china.

Until we accomplished some of the financial reforms on the household sector, we will not see a dramatic fall in the household saving rate.

Thank you very much.

Still to come, and i can't it's an update -- an icon gets an update.

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This text has been automatically generated. It may not be 100% accurate.


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