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Domestic Demand Drives Growth The Chinese government pursued domestic demand-boosting policiesas early as 1997 during the Asian financial crisis, said Liu He,deputy director of China s Central Leadership Office of Financialand Economic Affairs. During the crisis, a large amount ofcapital flight took place from China to the U.S. While domesticdemand-boosting policies were pursued to some success, the desireto attract foreign investment and ride the globalization wave meantthat over the coming years, less attention was paid to domesticdemand. As the global financial crisis was breaking out in 2008,international demand shrunk, and China was forced to focus onboosting domestic demand again, Liu explains. At the Fifth Session of 11th National People s Congress (NPC)which opened on March 5, Premier Wen Jiabao said in a governmentwork report that expanding domestic demand, particularly consumerdemand, is essential to ensuring China s steady and robusteconomic development for the long term, and is the priority ofgovernment work this year. Jia Kang, a member of the CPPCC and director of the ResearchInstitute for Fiscal Science at the Ministry of Finance, pointedout: While China has opened up its economy by relying heavily onforeign markets, the global financial crisis has taught us that wemust pay more attention to expanding domestic demands, no matterwhat stage of the economic cycle we are in. Expanding consumption has been increasingly stressed in Chinesegovernment work reports over the past few years. Work reports of2009, 2010 and 2011 all laid out measures to boost domestic demand,as well as implement and improve policies to further encourageconsumption. This year s government work report promised to set upa permanent mechanism to boost consumption. Since 2008 the Chinese government has implemented a slew ofpolicies on a trial basis to stimulate domestic demand. Theyinclude providing subsidies for home appliance purchases in ruralareas, cutting consumption taxes on cars with smaller engines,extending subsidies to cover more energy-efficient andenvironment-friendly products, raising thresholds for individualincome tax brackets and improving the medical care system. Statistics from China s National Development and Reform Commission(CNDRC) show that about 220 million home appliances were sold torural residents in 2011, with sales volumes exceeding RMB 500billion. Consumption accounted for 51.6 percent of China seconomic growth in 2011, indicating that China has beensuccessfully rebalancing its economy to rely more on domesticdemand. Zhang Ping, director of the CNDRC, pointed out that to expanddomestic demand, the government must raise people s incomes aswell as encourage them to spend more. To this end, the governmentshould expand employment opportunities, raise procurement pricesfor farm products, increase the minimum wage and set up a mechanismto ensure increases in average wages. A sound social securitysystem should also be established, Zhang says. The governmentshould further improve infrastructure to foster the convenient flowof goods from factories to consumers, as well as develop new formsof consumption such as online shopping. It should also continue toenhance supervision over the market to prevent fraudulent practicesand eliminate counterfeiting and shoddy products. We are high quality suppliers, our products such as Ceramic Coated Glass Manufacturer , Ultra-clear Glass for oversee buyer. To know more, please visits Low E Insulated Glass.
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