China should shift focus of stimulus to consumption from investment, relax restrictions on “Hukou” – PBOC advisor

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China should shift the focus of its stimulus from investment to consumption and further loosen urban residency curbs to boost migrant workers’ spending power, said Cai Fang, an advisor to the PBOC and influential economist at the China Academy of Social Sciences, a top government think tank. 

“The target of our stimulus should shift from investment to consumption, which can more directly correspond to our actual economic bottlenecks and weaknesses,” Cai said at a business forum.

Reforms of China’s system on residence permits, or “hukou”, will boost the consumption for rural migrant workers who had entered cities and boost their spending by more than 2 trillion yuan ($276.59 billion), he said.