NPC,  CPPCC Annual Sessions 2009

Special Report: Global Financial Crisis

Graphics shows the efforts the Chinese government will concentrate on seven areas in 2009, according to the government work report of China released on March 5, 2009. (Xinhua/Ma Yan) Photo Gallery>>>

    BEIJING, March 5 (Xinhua) -- China would make boosting domestic demand a "long-term" strategy and take further measures to stimulate consumer spending, as the country seeks to lead its economy out of a slowdown that started with falling export.

    The country would "give a full play" to the "leading" role of domestic demand, particularly consumer demand, in driving economic growth, Premier Wen Jiabao said in his government work report at the opening of the second session of the 11th National People's Congress (NPC) Thursday.

    China would actively boost domestic demand by increasing people's income, encouraging auto consumption, tapping the rural market, stabilizing the real estate market, offering proper housing for low-income families and accelerating the reconstruction of areas devastated in the May 12 earthquake last year, Wen said.

    The government would raise the proportion of the national income that goes to wages, he said, adding the government would continue to adjust income distribution and increase subsidies to farmers and low-income urban residents.

    Wen also said that central government investment, planned at 908 billion yuan (132.7 billion U.S. dollars) this year, would mainly go to projects that could improve people's life, to create a more favorable environment encouraging people to spend.

    "We must channel government investment to areas where it best counteracts the effects of the global financial crisis and to weak areas in economic and social development," he said.

    China used to rely heavily on export for growth, but it switched to boosting domestic demand to shore up the economy last November along with a huge four-trillion-yuan stimulus package, following a sharp decline in overseas demand as the global economic turmoil began to spread in the second half.

    The country's growth cooled to a seven-year low of nine percent last year, with a contribution of 0.8 percentage points from exports, compared to about three-percentage-point contribution to a revised annual growth of 13 percent in 2007.

    This year, China is under immense pressure to reach a targeted 8 percent to create enough jobs and ensure social stability.

    Prominent economist and political advisor Li Yining said boosting domestic demand was a decisive factor in attaining the 8-percent growth this year.

    "It is a right direction to boost domestic demand now," Yan Chengzhong, head of the economic development and cooperation research institute with the Shanghai-based Donghua University told Xinhua.

    "We have to count on domestic demand and investment to make up for hard-hit export to spur growth," said Yan, a deputy to the NPC session.

    China has announced several aggressive measures to bolster domestic demand and increase investment, including a 4-trillion-yuan stimulus package and a plan to expand rural consumption of home appliances with 40 billion yuan in subsidy to rural buyers and support plans for key industries.

    More detailed measures are stated in Wen's government work report, such as accelerating development of markets for second-hand cars and car rental, encouraging retailers to open stores in more townships and villages, and allocating 43 billion yuan in subsidies for building low-rent housing.

    Wen said the government would also make efforts to expand people's consumption in culture, recreation, tourism and new areas such as the Internet and animation.

    The Premier said the country would increase spending on social programs including pension, medical reform and education in 2009.

    Such endeavors would help leash the country's potential in consumer spending, as economists had long held that people tend to clutch their purses tightly for unexpected disease, a laid-off, or old-age in China due to lack of health insurance and social security.

    Li Yining said before the annual session the country needed to enhance agricultural productivity so as to increase farmers' income, in addition to putting both rural and urban residents under the umbrella of the social security network, before the domestic demand could take off.

    His comment was answered in the Premier's report. Wen said the central government would spend on agriculture, farmers and the rural areas a total 716.1 billion yuan, a year-on-year increase of 120.6 billion yuan, among other measures to boost farmers' income.

    The country's efforts to stimulate the economy has led the government to set a fiscal deficit budget of 950 billion yuan (139billion U.S. dollars) for 2009, a record high in six decades.

    "This is the most active, direct and efficient way we can expand domestic demand," Wen told nearly 3,000 lawmakers at the Great Hall of the People in downtown Beijing.