Can China Achieve Tech Self-Reliance and Boost Consumption Simultaneously?

China’s current strategy falls short of achieving both tech self-reliance and increased consumption. Rather than focusing on stimulating household demand, measures like trade-in subsidy programs are more inclined towards absorbing supply and enhancing production capabilities, resulting in temporary spending growth but no substantial shift in structure. One of the most impactful ways to elevate consumption, enabling market-driven returns on household savings, is currently not being considered. By increasing deposit rates, household income could immediately rise, leading to a decrease in precautionary savings. However, this shift could divert resources from state-centered technological investments. The Next Five Years The upcoming five years…