China to better demand structure to spur consumption

12-14-2010 08:57 BJT Special Report:2010 Central Economic Work Conference |

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With the holidays quickly approaching, the shopping season is in full swing. But there may be even more reason to spend this year if you're in China. The government is phasing out several policies that were implemented during the financial crisis to boost the domestic consumer market. The government is now looking at other ways to spur consumption by adjusting the demand structure.

An auto subsidy for small displacement vehicles that has boosted sales over the last 2 years, will be replaced in 2011. The policy was part of the government's efforts to boost domestic demand.

An analyst from the China Ministry of Finance says that the extra money from decreased subsidies will be put to use where the country needs it most.

Jia Kang, Director of Research Inst. for Fiscal Science, MOF said "Currently, it's not just to expand domestic demand, ensure economic growth and employment. The government is focusing more on improving the development of the economic structure. There are much stricter requirements for the fiscal policy."

Jia says to adjust the demand structure, money should be spent in sectors closely connected to people's well-being. One example is social securities.

Jia Kang said "If the government put more money in the social securities sector, residents will become more willing to spend. That will not only boost the domestic demand, but also benefit the China's citizens."

Analysts say the government may also focus more attention on other sectors important to citizens' well-being, such as housing, medical insurance, and compulsory education.

Editor:Xiong Qu |Source: CNTV.CN