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November 23, 2009

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Home » Business » Economy

Need for plan to lift consumption

HIGH savings and weak consumption were still the main structural problems for China's economy, and the country needed to craft a national plan to boost consumption and adjust the economic structure, an expert has said.

In an interview in the China Securities Journal on Saturday, Xia Bin, a researcher with the Development Research Center, a think-tank under the State Council, said China's gross domestic product growth in 2010 would mainly rely on expanding domestic demand.

"In the first three quarters this year, net exports drag down GDP growth by 3.6 percentage points. Next year, whether net exports will make positive contribution to GDP growth remains a challenge," Xia said.

So, China needed a consumption-based structural adjustment plan to help the economy further grow domestic consumption, he said.

The Chinese economy needed a massive boost in consumption, which had never been seen in the past 10 years or more, to make up for a slump in exports and weak private investment, he said.

Xia said such a national plan should include measures and incentives to spur peoples' consumption, cut savings ratio among firms and government departments, raise individual income and put dividends of state-owned company shares into a fiscal budget.

China's GDP expanded 7.7 percent annually in the first nine months of this year.

Official data showed that consumption in the first three quarters contributed 4 percentage points to GDP growth.


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