Expert calls for extra boost to consumption

Economist underlines private sector's growing role in consolidating recovery

Additional boost to consumer confidence and private businesses is needed to solidify China's economic rebound that has picked up in the first quarter of the year, a leading expert said on Friday.

Yang Weimin, a senior economist, said China's annual GDP growth target of around 5 percent is definitely "achievable" as the economy has shown signs of improvement.

"China's economic development will return to a normal, reasonable range and a long-term uptrend," Yang said on Friday at the Dalian International Finance and Development Forum, held in Dalian, Liaoning province.

Yet the basis for economic recovery still needs to be consolidated, especially when it comes to consumption, real estate, the private sector and foreign trade, Yang said.

It is time to change the years-long practice of increasing investment as a default choice of expanding domestic demand and to implement a pro-demand policy with focus on boosting household consumption, he said.

Yang made the remarks after China reported a faster-than-expected GDP growth of 4.5 percent year-on-year in the first quarter, with notable improvements in major indicators.

Particularly, the growth in retail sales accelerated to 10.6 percent year-on-year in March, compared with 3.5 percent in February, underpinned by a fast recovery in catering services, according to the National Bureau of Statistics.

Yet experts cautioned that such a double-digit growth may not point to a full-blown recovery in consumption, given that last year's low comparison base was a key reason behind the rally, making measures supportive of consumption still necessary.

Yang said efforts should be made to reform income distribution, including financial measures to reduce consumers' costs of getting loans and servicing their outstanding mortgages.

Fiscal measures to alleviate residents' tax and fee burdens and boost transfer payments to them are also needed, he said.

It would be helpful to reduce administrative controls on consumers' spending behavior and revise the policies that are restrictive of sales of residential properties, automobiles and some services, he said.

Moreover, the supply of midrange and high-end products and services should be expanded to better meet the demand of the consumption upgrade from middle-and high-income groups, Yang said.

He stressed that greater efforts are needed to fundamentally improve the development expectations of the private sector, as the growth in private investment and industrial activity is yet to recover.

Yang called for further clarity on the significance of the private sector in the country's modernization efforts, improvement to relevant legislations, better rules to protect property rights of the non-public economy — private enterprises, self-employed households, foreign businesses and the like — and removal of any implicit entry barriers facing private businesses entering the market.

Echoing Yang's remarks, Charlie Zheng, chief economist at Samoyed Cloud Technology Group Holdings Ltd, said fiscal subsidies to low-income groups who are still under stress may be effective tools to boost consumption.

Liu Zhihua in Beijing contributed to this story.