Govt to announce series of plans to boost consumption

The government will announce a series of plans, aiming to boost domestic consumption, the Ministry of Commerce said Tuesday.

"We will launch an outline of China's 12th Five-Year Plan (2011-15) for domestic trade development soon, in order to increase domestic consumption," Huang Minghai, director of the press office of the ministry, told the Global Times Tuesday.

Huang said that related agencies would be cooperating with the ministry. "They will release details of their consumption-boosting policies later on," said Huang.

The Shanghai Securities News, a business daily run by the Xinhua News Agency, reported Tuesday that the measures will include tax cuts and subsidies for certain sectors.

Official statistics showed that domestic retail sales hit 18.12 trillion yuan ($2.87 trillion) last year, an increase of 11.6 percent year-on-year after taking inflation into account.

The report also said the new outline will cover various industries including wholesale, retail, accommodation and catering, with the goal of realizing annual retail sales of 32 trillion yuan in the domestic market by 2015, a rise of 77 percent compared with the figure for 2011.

"The reason for launching such massive plans is the need to tackle the slowdown in exports," Wang Yiming, vice president of the Macroeconomic Research Institute at the National Development and Reform Commission, told the Global Times Tuesday.

China's export growth slumped in July to $176.9 billion, up just 1 percent year-on-year, indicating that "it will be an arduous task to meet China's foreign trade target, as external demand is weak," the General Administration of Customs said last month.　

The government set a target for foreign trade growth of 10 percent for this year; the country registered year-on-year growth in foreign trade of 22.5 percent in 2011.

"Now is the right time for the authorities to figure out policies to foster domestic consumption," Wang Xianqing, director of the Research Institute of Circulation Economy at Guangdong University of Business Studies, told the Global Times Tuesday, noting that the country's economy is facing various difficulties.

Economic growth slowed to a three-year low of 7.6 percent in the second quarter. And the country's 2,475 companies that are listed on the Shanghai and Shenzhen stock exchanges posted a combined first-half net profit of 1.02 trillion yuan, a decline of 1.51 percent compared to a year earlier, Xinhua reported Friday.

The combined profits of all the Chinese firms on the two exchanges surged by 22.4 percent year-on-year between January and June in 2011, and by 41.2 percent in 2010.

"The new outline could help guide companies to upgrade their production, and possibly adjust the country's economic structure as a whole in the long run," said Wang Xianqing.

Yin Xingmin, director of the China Center for Economic Studies at Fudan University, told the Global Times that to survive in a changing economy amid a backdrop of declining demand from home and abroad, "companies will have to properly understand the demands of domestic consumers and adjust their business model accordingly."