Consumer-led growth is the buzz phrase among China’s new rulers.
With the changing of the guard at the National People’s Congress, those taking over at the top have been told by the outgoing leaders to get the Chinese people spending more and narrow the gap between rich and poor.
In the government’s annual policy speech, outgoing Premier Wen Jiabao said that after decades of double-digit growth, the emphasis would no longer be on expansion at all costs: “This year’s economic growth target of around 7.5 percent is necessary and appropriate, and we need to work hard to achieve it.”
He added: “We should unswervingly take expanding domestic demand as our long-term strategy for domestic development.”
The plan is to rebalance China’s economic model shifting away from reliance on exports and investment in big infrastructure projects.
An important part of government moves to boost domestic consumption is a substantially increase in social spending on areas like health-care – which will go up by 27 percent this year. The hope is that will free up money for households to spend.