The central government's recent decision to raise the basic
salaries of public servants was a right choice to stimulate the
country's consumption demand, economists say.
China's public servants, who have complained of being poorly
paid for a long time, will get a much fatter pay packet January 1,
2004.
Their raises, ranging from 30 to 300 yuan (US$3.60-36) a month,
will be retroactive from July 1 this year.
This is the third time the government has raised the salaries of
public servants since 1999, effectively doubling these people's
basic salaries.
Niu Li, a senior economist with the State Information Centre,
said this was good news for China's consumer markets, a key engine
for the country's economic development.
"With more money in their hands, public servants can spend more
on housing, cars, travel and telecommunications, as well as on food
and clothing,'' he said.
The salary increase will also help solve the problem of low
salaries among public servants, which is considered one of the
chief causes of corruption, he said.
Yuan Gangming, a senior economist with the Chinese Academy of
Social Sciences, said the recent move (to raise public servants'
salaries) is mainly aimed at stimulating consumer demand, one of
the weaker sections in the booming economy, which is driven largely
by investment.
China's retail sales rose a year-on-year 8.9 per cent during the
first 11 months of this year, figures from the National Bureau of
Statistics show.
"Weaker consumer demand but aggressive investment have become
headaches for the government in its effort to carry out its
macro-control policies,'' Yuan said.
Raising the salaries of public servants is one of the best ways
to solve the problem, he said.
The government should also try to increase the income of rural
residents as part of the proactive fiscal policy, he said.
The slow income growth of rural residents has long been a
headache for the government, because it severely restrains
stimulation of consumer demand.
"If consumption in rural areas cannot be stimulated, the full
expansion of domestic demand will not be realized,'' said Xie Yang,
a senior researcher with the State Development Research Centre
under the State Council.
The government should continue to encourage farmers to go out
and find work in cities, as the farmland in the country cannot
accommodate so many farmers.
China also should prioritize the development of township
businesses and the expansion of small towns, create more job
opportunities for farmers and accelerate the resettlement of
unemployed rural laborers, he said.
(China Daily?December 17, 2003)