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China to open markets, boost domestic consumption to fight global slowdown

January 4, 2012

China aims to boost domestic consumption in order to fight the bitter pill of slowing trade and economy. In a policy paper released today, the Ministry of Commerce said new measures will be introduced to boost consumption, especially for vehicles and electrical appliances, as export demand weakens. Chinese Premier Wen Jiabao further said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed.

With tax rebate policies on vehicles and appliances having expired or due to expire, “new measures are in the pipeline,” to boost consumption, said Huang Hai, former assistant minister of commerce and member of the economic and trade policy consulting committee affiliated to the Ministry of Commerce.

“The Ministry of Commerce has drafted a proposal to continue the stimulus programs in the coming few years, but in different ways, and they are expected to cover vehicles and those related to real estate, say household appliances,” Huang told China Daily in an exclusive interview.

The measures may include subsidies for consumers in affordable housing to buy appliances and for those planning to change their cars.

The ministry is also expected to hold the National Commerce Work Conference on Thursday and Friday, during which Commerce Minister Chen Deming will make a keynote speech. Deming’s speech is expected to launch new programs on expanding domestic consumption. Huang also disclosed that under the instructions of Premier Wen Jiabao a national circulation conference, the first of its kind, will be held around April. Government officials will discuss how to introduce concrete measures to boost consumption at the conference, he added.

Export growth in November slowed to 13.8 percent, the weakest pace since gains resumed in December 2009 after the global financial crisis, excluding distortions caused by the Lunar New Year holiday. Retail sales rose a more-than-estimated 17.3 percent in the same month.

The ministry will encourage companies to invest and make acquisitions overseas, Chen said. China will also increase imports of energy products, raw materials, technologically advanced equipment, key components, and consumption goods this year, he said.

The government will “steadily” open the education and medical services industries to overseas investors, and will set up a system to review and monitor acquisitions by foreign companies that may affect the country’s security, he added.

 

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