It's hard to boost domestic demand

The consumer price index has declined, and the per capita disposable income has increased in the first half of the year. But white-collar workers, who are expected to be the main force to boost domestic consumption, have no extra money to spend, reflecting an awkward dilemma, says an article in Xinhua Daily Telegraph. Excerpts:

A Beijing-based young white-collar worker, named Zhou Weihua, calculated his income and spending per month and concluded that even if his salary increased 10 percent a year, his earnings could meet only his basic needs which include rent, three meals a day and transport costs. So he will have no more money left to buy anything else.

Zhou's example shows how difficult it is to boost domestic consumption.

Since the three forces that can boost the national economy - investment, exports and consumption - have not been performing well, the pressure on the slowing economy has increased.

The slowing down of the economy will eventually lead to a decline in people's disposable income and, thus, domestic consumption, leading to a vicious economic cycle.

On the market front, reports of poor quality Chinese goods have made many customers lose confidence in made-in-China products such as milk powder, and companies producing them have lost their credibility. Such incidents have further harmed China's domestic consumption.

Also, skyrocketing housing prices have left many people with no option but to give up the idea of buying a house, because most "house slaves" have to pay mortgage for more than 10 years and forget about spending money on things other than basic necessities.

Increasing people's income and maintaining a stable middle class will create the socio-economic base to boost domestic demand, which is a systematic engineering project in China now. We can start this project by improving the quality of our products to earn back consumers' confidence.

China with its 1.3 billion people is the largest market in the world, and we should stimulate the market potential as soon as possible.

(China Daily 08/24/2012 page9)