(Yicai Global) Jan. 4 -- The scars of the Covid-19 pandemic will remain for a long time, but to cope with the situation we need to recognize that consumption will be more important than investment or external demand in sustaining China’s economic growth in 2023.

The economic effects of the three-year pandemic are clear: enterprises dare not invest, people dare not spend money, and firms have diminished confidence.

For a long time, we have not attached enough importance to boosting consumption and have placed too much emphasis on investment. Consumption is the main driver for China to expand internal demand and maintain stable economic operation. In terms of how to shift the focus of policy support from investment to household consumption, I have some suggestions.

First, the government could issue consumption vouchers to all residents. To do this, it should set up a fund to issue CNY1 trillion (USD145.2 billion) of special treasury bonds, and offer people CNY1.4 trillion to CNY2.8 trillion of cash subsidies or vouchers, no later than March, providing CNY1,000 to CNY2,000 (USD145 to USD290) to each person.

Second, China could increase people’s financial income through various channels, including steadying property prices, avoiding a burst of the real estate bubble, and vigorously boosting the capital market.

Third, the government should offer subsidies on consumer electronics, home appliances and new energy vehicles, while encouraging the development of green consumption and promoting the integration of online and offline consumption channels.

Fourth, there should be policy support for first-time homebuyers and upgraders buying pre-owned housing. This could include lowering down payments, cutting property trading taxes, and lifting property buying restrictions in some non-first-tier cities, in a bid to revive the bleak real estate market.

(The author is chief economist at Huatai Asset Management and director of the China Chief Economist Forum.)

Editor: Tom Litting