WORLD> Impact on China
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WORLD> Impact on China
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Retailing to power growth
By Wang Xu (China Daily)
Updated: 2009-01-23 07:40 The nation's consumption will remain robust in 2009, providing a much-needed growth engine to cushion the export slowdown, a senior government official said.
"The strong consumption growth will continue, given the improvement in consumption environment like the social security system," Ma Jiantang, head of the National Bureau of Statistics, said at a press conference yesterday. China's retail sales grew 21.6 percent year-on-year in 2008, up from 16.8 percent in 2007. In contrast, the growth rate of investment only increased 0.7 percentage point to 25.5 percent. Export growth dropped to 17.8 percent, down from 25.7 percent a year ago. Policymakers are expecting domestic consumption to become a stabilizer for the economy, as some forecast the nation's exports might fall in 2009. In the long run, strong domestic consumption and less dependence on overseas markets would make the nation less vulnerable to overseas economic fluctuations. Domestic consumption accounted for about 60 percent of China's GDP in the mid-1990s, but declined to around 50 percent in 2008, Zhou Xiaochuan, governor of the central bank, said earlier.
Ma said factors such as the rising incomes of local residents and improvement in the social security system would help boost consumption. Disposable income of urban residents averaged 15,781 yuan in 2008, up 14.5 percent year-on-year. Meanwhile, average income of rural residents grew 15 percent, the strongest rate in recent years. The government said on Tuesday that it would spend 850 billion yuan in the next three years to provide accessible and affordable healthcare to the country's 1.3 billion people. The plan is expected to significantly reduce expenses of primary healthcare and medical services for ordinary citizens. Presently, about 400 million people do not have any kind of healthcare coverage, according to the Ministry of Health. Still, some economists say consumption growth is uncertain, as consumer confidence and the job market have both suffered in the current economic downturn. "Private consumption is likely to weaken in China this year, due to lower confidence and deteriorating job market," said Sebastien Barbe, senior economist with Calyon, a French investment bank. According to the National Bureau of Statistics, the consumer confidence index dropped from 94.5 in September to 90.2 in November, the latest official figures available. China's urban registered unemployment rate jumped for the first time in five years to 4.2 percent as of Dec 31, the Ministry of Human Resources and Social Security said earlier. The jobless rate, which excludes migrant workers and farmers, was 4 percent in the first three quarters of 2008. Policymakers have raised the unemployment forecast to 4.6 percent this year, which would be the worst since 1980.
 (China Daily 01/23/2009 page15) |
