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Beijing Review Exclusive
Special> Global Financial Crisis> Beijing Review Exclusive
UPDATED: February 13, 2009 NO. 7 FEB. 19, 2009
Spend to Your Heart's Content
The government believes that boosting domestic consumption this year will help it achieve its 8-percent economic growth goal
By WANG JUN
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Suning Appliance Co. Ltd., one of China's largest home appliance retailers, recently teamed up with eight domestic banks to roll out an "easy buy" plan that lets shoppers purchase home appliances in installments with no downpayments or handling fees and zero interest. This is only one of the many measures that retailers and banks around the country are taking at the behest of the government to bolster domestic consumption to keep the country's economic growth on track in the wake of falling export demand.

Jiang Zengwei, Vice Minister of Commerce, said at a press conference in Beijing on February 9 that governments at various levels have adopted various measures this year to explore the market and expand consumption. They include applying innovative marketing approaches to stimulate consumer interest, developing marketable commodities to satisfy new consumer demand, aligning production with demand and building a diversified consumer platform, reducing business costs and promoting economic growth based on domestic consumption.

Because the international crisis has yet to bottom out while its impact on the Chinese economy continues to unfold, the Central Government plans to put in place further measures to boost consumption, mainly to help it attain its economic growth target of 8 percent this year.

Jiang said the country would develop a retail network of 510,000 convenience stores in the vast rural areas by the end of 2010 as part of its efforts to help jobless migrant workers who have returned home to look for work after being laid off from factories in the coastal cities.

"We will build 250,000 new stores in 2009 and 2010, and these stores are expected to create about 770,000 jobs," Jiang said.

He said that since the government started the "market project of thousands of villages and townships" in 2005 to encourage the opening of retail stores in rural villages, the Ministry of Commerce had set up 260,000 such stores. Each of them on average offered 3.1 or 3.2 job opportunities for farmers. The retail network is expected to cover 75 percent of the country's rural townships and counties.

Jiang said the ministry had strict financial criteria for rural retail stores, most of which are mom-and-pop shops. For instance, companies running village retail chain stores in the relatively developed eastern region must have registered capital of at least 3 million yuan ($438,596), while those operating chain stores in the central and western regions must have no less than 2 million yuan ($292,398).

Voucher program

According to a Xinhua News Agency report, the local governments of Hangzhou, Zhejiang Province, and Chengdu, Sichuan Province, issued vouchers totaling 1 billion yuan ($146.2 million) and 37.91 million yuan ($5.83 million), respectively, for local registered low-income families just before the Chinese lunar New Year holiday in hopes that they would go out and buy items. An estimated 380,000 of Chengdu's residents received such vouchers, while Hangzhou offered them to 580,000 residents, including the city's 260,000 primary and middle school students. The vouchers, each valued at 100 yuan or 200 yuan, can be used at local stores and supermarkets. Hangzhou residents also can use them at cinemas and bookstores.

The vouchers issued by local governments to low-income families are playing a positive role in stimulating domestic spending, Jiang said, adding that they are "practical" and "effective," given the current economic slowdown.

Jiang said the establishment of a comprehensive social security system would also increase consumer confidence.

"We have been preparing for reforms in China's health care system and education scheme. Once implemented, both of them will help enhance consumption," he said.

In response to a question from a reporter at the press conference, Jiang said that China would not create a "buy China" policy similar to the "buy American" provision in the U.S. Government's stimulus package.

"In a time of globalization, no country can satisfy its own market with its own production," Jiang said, adding that although more than 80 percent of China's commodities sold on the market come from domestic manufacturers, the country still must import industrial raw materials, luxury items and farm products.



 
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