China to expand access to welfare benefits in push for economic growth

  • The Chinese government is redoubling efforts to help rural people moving to cities tap into welfare services.
  • 19 government departments, including the National Development and Reform Commission (NDRC), the Ministry of Finance and the People’s Bank of China, vowed to make it easier for migrants in cities to tap into public services, such as healthcare. Essentially making it easier for rural people to receive urban Hukou.
  • This comes as China presses on with a poverty alleviation drive and tries to shore up economic growth against demographic headwinds.
  • The urbanisation process, as a result of people relocating to cities with ameliorated job prospects, has also been a key driver of growth, bringing much-needed people for manufacturing and service jobs, stimulating government spending on infrastructure and housing, and lifting consumer spending.
  • In the age when the service sector dominates, greater mobility of labour will greatly improve productivity
  • However, only 45.4% of the population had an urban hukou in 2020.
  • Narrowing the gap in welfare coverage is expected to help tap a new potential source of growth, as the pace of urbanisation slows and China’s population shrinks.
  • China aims to increase economic growth to above 5% from last year’s 3%.

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