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Fueling domestic demand

0 Comment(s)Print E-mail China Daily, March 7, 2013
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Zhang Ping

The ongoing National People's Congress session has seen top officials map out a clearer roadmap for further unleashing the growth potential of the world's second-largest economy.

Zhang Ping, head of the National Development and Reform Commission, said on Wednesday that the country will rely on urbanization and domestic consumption to sustain stable growth after 30 years of blisteringly fast expansion.

Echoing Premier Wen Jiabao's speech a day earlier, Zhang said there is still much room for further expansion of China's economy as urbanization and domestic demand will be the new engines for future growth.

Tackling the two problems will improve people's living standards, and, more importantly, provide long-term driving forces for the economy. So policymakers have chosen the right options for fueling the long-term expansion of the national economy.

Despite the high annual growth of retail sales, the ratio of consumption as a proportion of GDP remains low here. The official ratio stands at less than 50 percent, compared with about 80 percent in many other countries.

Its urbanization rate, or the proportion of people living in the urban areas, is also low, even when compared with countries of comparable economic development levels.

Such policy orientation is actually the continuity of a shift in policy that has already been initiated, when the nation realized that simply increasing inputs would not lead to sustainable economic growth.

If the rapid economic expansion of the past three decades was a necessary means for the country to shake off poverty, pursuit of a balanced and sustainable economy is a must for China in the years ahead. Such a transition will be a long and painful process, and will not be without pitfalls.

The nation needs to further its reforms of the distribution system to allow the public to share more of the fruits of economic growth. Consumption will not be boosted without an income support.

Urbanization also needs to be done in a more inclusive manner, so that those moving from rural areas to cities and towns can settle down permanently and enjoy stable incomes, decent jobs and affordable housing.

During the urbanization process, the nation must also avoid inefficient investment and more environment damage.

As Zhang rightly urged, we need to pay more attention to the quality of urbanization and align the process with China's environmental capability and resources.

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