Prof. Huang, I agree that China’s weak household demand deserves greater policy attention, particularly through hukou reform, stronger social protection and higher household income. But I am less convinced that the current K-shaped economy can be explained primarily as the product of a deliberately K-shaped policy regime.

Your textual analysis relies on NDRC reports, yet the NDRC is institutionally responsible for development planning, major projects, investment and industrial policy. An equivalent analysis of documents from the ministries responsible for employment, welfare, healthcare and education, or of the State Council’s Government Work Reports, might produce a different picture. Technology and industrial upgrading are also not separate from employment and income; they are the foundations of future productivity, wages and fiscal capacity.

More fundamentally, technological progress and industrial upgrading are themselves the foundations of future employment, wage growth and fiscal revenue. Consider CXMT’s recent IPO. Its 6,800 employees collectively owned 7.8 per cent of the company. Following the listing, those shares were worth roughly RMB 260 billion, equivalent to an average increase in employee wealth of nearly RMB 40 million.

The central difficulty is whether new industries can absorb the jobs, incomes and balance-sheet losses released by the decline of property and other old growth engines quickly enough. That adjustment is shaped largely by market structure and cannot be reversed simply by increasing the textual prominence of “consumption” in policy documents. Historically, China has emerged from similar periods of divergence mainly by building new growth engines and expanding the economic pie, rather than through redistribution alone.

Redistribution, social security and consumption support are necessary to reduce the costs of transition, but without productivity growth and competitive industries they cannot sustainably finance higher household incomes, pensions or healthcare. Nor do I think Beijing has simply ignored demand: the recently approved 15th Five-Year Plan for Expanding Consumption explicitly targets household income, social protection, services consumption and a higher consumption rate. The more accurate interpretation, in my view, is that China is trying to strengthen demand while preserving the industrial and technological upgrading required to generate the next round of income growth.