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Ed Zhang

As the global economy becomes more volatile, China has to rely more on its own consumers to sustain growth.
Few economists in Beijing dispute that line of thinking, but questions remain about how it might be achieved. 
A look at the annual statistical reports for last year released by provinces, municipalities and autonomous regions shows some big differences in retail performance, with National Development and Reform Commission (NDRC) spokesman Li Pumin quoted in an analysis piece in the People's Daily as saying that meant there was a lot of potential for improvement. 
The official newspaper said a Central Economic Work Conference  at the end of last year decided that the focus for this year should be on boosting spending by mainland consumers. 
If handled well, Li said, Beijing could steer clear of stagflation (high inflation, high unemployment and stagnant demand) or a hard landing (economic collapse) and achieve another year of relatively steady and rapid growth. 
At first sight, retail sales looked great last year in large cities and more developed regions, despite heavy intervention in the housing market and the withdrawal of government incentives for car purchases. 
Guangdong's gross domestic product increased 10 per cent to 5.3 trillion yuan (HK$6.48 trillion), making up more than a tenth of the mainland's total of 47.16 trillion yuan. The province also accounted for a tenth of the nation's retail market, generating 2.02 trillion yuan in sales out of a national total of 18.12 trillion yuan.
Another 1.58 trillion yuan was contributed by Jiangsu  province, the mainland's second largest economy, while retail sales in the municipality of Beijing totalled 690 billion yuan, with Shanghai recording 678 billion yuan. 
But Professor Li Yining, a Peking University economist, was quoted in the same analysis piece as saying there are many low- and middle-income households that are still worried about spending on consumer items. 
They were unlikely to do so until they were included in a social security net, he said. 
Li Pumin said incentives were being designed by policymakers in Beijing to make this happen. 
Sun Lijian,  deputy dean of Shanghai's Fudan University school of economics, highlighted another factor that can play a positive role in helping people improve their quality of life and help rebalance the economy at the same time. 
Sun noted on China National Radio  that for the first time, the  government's revenue exceeded 10 trillion yuan last year, up 25 per cent - far more  than the rise in GDP  of 9.2 per cent.
This government windfall, he argued, should be reinvested in society - boosting demand to help the economy develop new industries.
'Our society is very concerned as to whether the government can use its revenue to pave the way for this change,' he said. 
Also commenting on China National Radio, Professor Li called for the government to guarantee private property rights and provide incentives to private developers of small farms and orchards. 
Policy changes may be announced at the annual session of the National People's Congress in mid-March, but danger signs are already gathering in the real economy.
Beijing's municipal commission for housing and urban-rural development says the number of housing sale contracts agreed in the first 10 days of this month were down more than 60 per cent. 
Similar trends have also been spotted in many cities. But without permission from the central government, no city dares to ease up on intervention in the housing market. 
At the same time, Wei Jianguo , a veteran trade official, was quoted in an analysis filed by China News Service as forecasting this year to be the most difficult for mainland exporters since 1998. 
China News Service also noted that three major policy incentives for manufacturers of home appliances, which the government designed to counter the effects of the global financial crisis in 2008, all expired last year.
Will there be new incentives offered this year? No one can tell yet.



Bid to boost spending as storm clouds gather over the economy