After 30 years of rapid growth, the increase in China's savings rate also provides a source of capital for national economic growth. From the perspective of promoting consumption growth, we should improve the allocation structure of economic growth, that is, increase the percentage of individual income in the aggregate volume of economic growth. In the meantime, we should redouble our efforts in developing industries that provide a large number of job opportunities. As people's basic demand, employment is not only a condition for income growth, but also a kind of state of people's lives.

China's consumption may double in the next economic cycle

Yuan Yue: During the economic crisis, people even hope to buy things doubling the value of money they spend and the consumption tendency is obviously conservative. The United States, Europe and China are alike. But what will the situation be in the next economic cycle?

An American expert once told me that even when the economy recovers, consumption in the United States won't recover to the level before 2008. I hold the opposite view: In the next economic cycle, consumption in China will double.

I have two basic reasons for this judgment. First, in the past few years, China put considerable investment into social programs. Among the stimulus packages adopted by countries around the world after the financial crisis broke out, China stands out for its input into people's livelihood. Whether in housing, medical and endowment insurance, urbanization or new countryside construction, this input will continue to expand.

There are three major reasons for the present high savings rate in China: the need to provide for medical and old-age care, children's education and preparation for durables. The large input by the Chinese Government in people's livelihood should have a "securing" effect, relieving people's worries so that they will spend more money. The securing effect will play an obvious role in the next economic cycle; until that time, China's overall consumption market will expand.

The second reason I believe consumption will double is that in the next economic cycle, the only-child generation in China will become the major force of consumption. They are the first generation of consumers with ideas completely different from traditional Chinese culture. The existence of only children has created a unique phenomenon in which families make purchases together. For example, when a young adult buys an apartment, parents often pay the down payment and the child provides the monthly installment. Therefore in the next economic cycle, people between the ages of 15 and 34 will not only become the major force of consumption, but also drive up their parents' consumption.

During the next economic cycle, increasing consumption will create some important opportunities for global businesses. Because of growing demand and inadequate supply in the Chinese market, the country, for the first time, will become a major player in the global consumption market. Today we export huge amounts of goods to the United States and Japan, but in the future, when China's consumption expands, only huge amounts of imports will be able to meet the demands of Chinese consumers.

Moreover, there are new characteristics of consumption among the younger generation in China. For example, young Chinese consumers' consumption cycle of mobile phones and MP3 players is almost the same as the consumption cycle in Japan, and in the future it will be shorter. Such a consumption market will create big opportunities for companies. I think corporate performance in three areas will decide if these opportunities benefit mainly domestic companies or overseas companies.

First is their change in research and development (R&D). Since consumers upgrade products rapidly in a short cycle, a short R&D period can help a company grasp the market. For example, the R&D period for automobiles used to be four years, but Japan shortened it to two and a half years and thus seized the U.S. market. In the future we may shorten it to one year or one and a half years, putting us in a favorable position.

Second is the ability to provide informationization based on R&D.

Third is support of consumption financing.

Companies should be able to find such business opportunities and take steps in preparation for the future.

During the next economic cycle, China will not only have high domestic demand, but also change its performance capability in the global consumption market.