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China stresses domestic demand in stimulating growth

By (Xinhua)
Updated: 2009-03-05 10:11

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.

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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 ($132.71 billion) 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 stresses domestic demand in stimulating growth

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.

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