Expanding consumption

Domestic consumption can undoubtedly help maintain the momentum of China's economic growth at a time when exports have shrunk due to global financial woes.

The State Development and Reform Commission is reported to be drafting a package to stimulate domestic consumption. It is said that the threshold for income tax will possibly be raised, and so will the salaries for residents. Subsidies for housing and for low-income earners will also be increased.

The 4 trillion yuan economic stimulus package announced early this month will undoubtedly help create a lot of jobs and boost domestic demands. Yet, economic growth can hardly be sustained only by large-scale investment in infrastructure construction. Furthermore, the economy is likely to be overheated once the investment is too huge in fixed assets.