Currently, China's economic development depends largely on investment; however the rate of consumption lags behind developed countries by 25 to 30 percent. To further expand consumption, promotion of sustainability is needed for residents, including income, employment, and social security, which are long term projects.
In the first half of 2009, the urban per capita disposable income and per capita income of farmers increased by 11.2 percent and 8.1 percent respectively. However, their proportions in GDP are still relatively low. Residents are willing to save money and make investments.
Newly-created jobs exert a positive influence, but farmers and college graduates are still under great employment pressure. There is still a lot to be done, like in fields of basic pensions, medical and unemployment insurance as well as urban and rural social assistance.
In the first half of 2009, China's CPI dropped by 1.1 percent year-on-year, while the CPI saw an increase of 7.9 percent in the same period last year. In addition, since March, the CPI declined successively month-on-month, which will possibly influence growth rate of consumer spending.
According to the Ministry of Commerce, between January and June, the year-on-year growth rate of sales of thousands of key retail enterprises only increased by 0.7 percent compared to the first five months, indicating that there are certain factors restricting consumption.
In the rural market, due to the lower purchasing power of farmers and a low base for consumption coupled with falling prices for agricultural products, it is very difficult for a big rise in consumption to last long, let alone surpass the city in the long term. It is not possible for large quantities of export goods heading for the domestic market to be consumed by the rural market.
China's economy depends largely on foreign trade, and in the first half, exports dropped the GDP by 2.9 percent.
By People's Daily Online