There are two aspects of domestic demand: consumption and investment. Looking ahead, consumption will make for steady and stable growth, because the rapid growth of people's incomes will boost domestic consumption growth, Li said.

The NBS figures indicate that in the first quarter, the per-capita disposable income of urban residents rose 11.2 percent after deducting price factors and the per-capita cash income of rural residents rose 8.6 percent in a real term.

"Income decides the future consumption," Li said.

When economic growth slows, personal income growth will also weaken, but the high savings rate of Chinese will become an important factor to help consumption growth, Li said. This is different from countries that rely on credit-based consumption.

The NBS figures indicate that the individual savings deposits totaled 24.3 trillion yuan ($355.78 billion) at the end of the first quarter, so that each Chinese had an average of more than 20,000 yuan ($2,928) in the bank.

The government has also raised subsidies for farmers to grow grain and increased rural pensions and subsidies to low-income families. This will promote the growth of domestic consumption among low-income groups, Li said. Furthermore, with wider social security coverage and the reform of the health care system, the concerns of ordinary people may have been relieved to some extent, which would help boost consumption, he said.

Government policies such as reducing the vehicle purchase tax and subsidizing farmers who purchase home appliances and automobiles as well as policies adopted by some local governments to issue vouchers to promote spending will all boost the growth of consumer spending.

"In the first quarter, retail sales in rural areas were higher than those in urban areas, so that we can see that our policy of subsidizing farmers to buy home appliances has played an important role," Li said.

Investment is key to expanding domestic demand. In the first quarter, fixed-asset investment surged 28.8 percent year on year, faster than both the rate in the same period last year and the rate for all of 2008.

"At present, quite a large amount of expanded domestic demand is directly reflected in investment demand," Li said.

Future investment will still maintain fast growth for two reasons, Li said. First, the Central Government's policy of expanding investment will continue to produce effects. The Central Government's 100-billion-yuan ($14.64 billion) in expanding investment decided last year has all been allocated by now. Among the 130-billion-yuan ($19.03 billion) investment for this year, 110 billion yuan ($16.11 billion) has already been allocated. Most of this has been invested in rural infrastructure, railways, highways, health care, culture, education and houses for low-income families.

Second, the supply of capital is ample. Among the 4.58-trillion-yuan ($670.57 billion) newly increased loans in the first quarter, 1.85 trillion yuan ($270.86 billion) are medium- and long-term ones.

Third, investment in new construction projects grew rapidly. In the first quarter, it soared 87.7 percent over a year ago.