Ann: 31 December 2022 Quarterly Market Update, page-15

Should be a good year for commodities.

Xi doubles down on push for consumption to fuel economic recovery

• Xi states in a national address yesterday that people should be able to ‘consume based on a stable income, dare to consume without worries, and have a good consumption environment with a strong sense of gain and strong willingness to consume.’
• He stated that investment would be targeted at new infrastructure, high-tech industries and ‘strategic emerging industries.’
• He emphasised the importance of science and technology for the future of China’s economy.
• Despite this, Xi stated Beijing’s commitment to continue to control monopolies and ‘unfair competition,’ in line with his common prosperity drive which has been the Politburo’s primary concern in recent years.
• The statement follows Xi’s second in command, Li Keqiang’s statement on Tuesday that ‘boosting consumption is a key step to expand domestic demand,’ and that China needs ‘to restore the structural role of consumption in the economy.’
• Although these statements have been a consistent theme in Chinese governmental policy for over a decade, household spending in 2021 stood at 38% vs the US’ 70% of GDP.
• Chinese saving rates have soared to $2.6tn in 2022 vs $1.47tn in 2021.