Continued stability is forecast for the country's consumer goods market in the remaining months of the year, although the government plans to offer stimulus in the form of a salaries hike for civil servants, experts said.
"Consumers have become more rational and are no longer easily influenced by small policy changes,'' said Zhang Yingxiang of the National Bureau of Statistics, adding that she foresees no major fluctuations in the next few months.
Unnecessary taxes and fees for car and housing consumption are likely to be cut and civil servants' salaries increased to expand domestic demand and minimize the negative effects of the global economic slowdown, sources said.
On housing consumption, a number of fees and taxes have been cut in recent months.
In April this year, the Ministry of Finance and the State Development Planning Commission announced that some 47 fees charged for real estate development would be scrapped.
The fee cut lowers building costs by about 16 yuan (US$1.90) per square meter.
The room for further cuts of fees and taxes is very limited, because they only account for a small part of housing costs, Zhang said.
On cars, the country last month announced a reduction of the consumption tax by 30 per cent for autos, which meet the European II Environment Protection Criteria.
But a spokesman for Guangzhou Honda Automobile said it was hard to say whether carmakers would be able to pass the savings from the slashed consumption tax to consumers.
"The impact of the policy on the domestic market would be indirect. Domestic companies would consider whether to put the money saved back into technology innovation, or just lower the price,'' the spokesman said.
Zhang said the country needed to create new products for consumption, as residents had different demands.
Meanwhile, the country should take measures to increase farmers' incomes to expand the vast rural markets.
Figures from the National Bureau of Statistics indicate that retail sales in urban areas rose 11.4 per cent to 180.4 billion yuan (US$21.7 billion) in July, while those in rural areas rose only 7.2 per cent to 104.7 billion yuan (US$12.6 billion) in the same month.
"The slow growth of farmers' incomes has greatly affected the implementation of the government's demand-stimulating policy,'' Zhang said.
Statistics indicate that the per capita cash income pf farmers reached 1,063 yuan (US$128) during the first half of this year, an increase of only 4.2 per cent on the same period last year.
If consumption in rural areas cannot be stimulated, full expansion of domestic demand will not be realized, Zhang said.
(China Daily 09/05/2001)
