Financial innovation will help boost mass consumption

China should give full play to the role of financial policy in stimulating household consumption.

Consumption contributed 65.4 percent to China's economic growth in 2021. To meet young people's demands to buy housing, cars and home appliances, as well as elderly people's demands for high-quality life in their later years, financial institutions should provide them with more personalized products and services. They should adjust their credit policies, appropriately increase the scale and proportion of consumption loans, and give more incentives to individual consumption businesses to guide more funds to support consumption credit.

Although there are about 200 million flexible workers in China, the traditional consumer credit system excludes those who do not have a fixed occupation, job and income. Large-sum consumption credit usually requires having a housing mortgage, which too excludes flexible workers. Adapting to the changed employment market, commercial banks should revise their credit management system, providing targeted consumer credit products and expanding the scope of consumer finance products based on the characteristics of flexible employment.

The country should strengthen the empowerment of fintech and improve the risk management mechanism of consumer financial products. Compared with enterprises, individual credit risk is larger. Therefore, when developing consumer credit, financial institutions should not simply rely on housing mortgage to control risks. They should comprehensively consider financial and non-financial factors, relax credit conditions such as fixed occupation, residence and income, build a more scientific consumer credit risk assessment model, and expand the scale of consumer credit under the premise of controllable risks.

It is necessary to strengthen the construction of financial hardware infrastructure such as payment and clearing, data management and technical systems, as well as software infrastructure such as financial ethics and financial standards, to better protect the rights and interests of financial consumers and create a favorable environment for financial consumption.