Shopping for clothes. China's government is seeking to boost domestic demand to transform the country's economy. (File photo/Xinhua)
China's Ministry of Commerce recently announced the launch of the 2012 Consumption Promotion Month between April 2 and May 4 to coincide with the Tomb Sweeping Day and Labor Day holidays.
The central government asked local governments to expand domestic consumption during the more than one-month period.
The Chinese premier Wen Jiabao said in a government work report during the Chinese People's Political Consultative Conference and the National People's Congress earlier this month that the government will work to expand consumption demand in keeping with the policies under the 12th Five-Year Economic Development Plan (2011-2015).
In its announcement, the government requested local commercial departments to promote consumption, make plans ahead of time, select a group of large business enterprises as well as food and catering services enterprises as the main body of the activity and carry out large-scale promotions in major cities.
The ministry said promoting consumption should aim to improve people's livelihoods and meet the public's material and cultural needs. It should expand the scale of consumption and make it more convenient. The announcement also asked that festive activities be launched to encourage consumption across the whole country.
To expand the scale of consumption, Wen said in the report that the government would further encourage resident consumption and actively develop care for the elderly, home management, property management and medical care services. It would focus on consumption in culture, tourism and fitness. Further, it would support eco-friendly materials for construction, water conservation, cleaning equipment and green vehicles. Internet shopping would also receive attention, he said.
The country's commerce minister, Chen Deming, said government agencies are studying alternative policies to expand consumption.
Chen said subsidies on the purchase of home appliances in rural areas would expire in 28 provincial cities and regions by the end of this year. Meanwhile, the major tasks for the government this year would be recycling used electronics and old cars, holding activities to promote consumption and launching trial programs for modern service industries. In addition, boutique stores and sites for world conferences and exhibitions would be set up in Beijing, Shanghai and Tianjin, with brand exhibition centers launched around the country.
In related news, while China's GDP growth target was set at below 8% this year, various factors are expected to boost the economy and the performance of China-related stocks.
Institutional investors said the national consumption promotion program, the two hikes in the banks' required reserve ratios in three months and the high expectation of long-term renminbi appreciation would drive the strong performance of China-related shares.
A market expert said an estimated 400 billion yuan (US$63.17 billion) was expected to be channeled into the market after the People's Bank of China again raised its RRR by 50 basis points.
In addition, the upcoming reshuffle of the Chinese leadership and a cross-strait investment protection agreement, expected later this year, may help boost the stock market.