A good start

FESTIVAL WALK: Tourists visit the West Lake Garden in Fuzhou, capital of Fujian Province, during the Spring Festival. During the week-long holiday, Fujian realized a tourism income of 2.85 billion yuan ($419 million), up 17.6 percent compared with figures from 2009

Of the three major forces driving the Chinese economy, consumption has long been considered the least reliable compared with exports and investment. Last year, while the export sector, shattered by the world financial crisis, crippled GDP growth by dragging down 3.9 percentage points, government-stimulated consumption pushed it up by 4.6 percentage points. It is still much lower than investment, which contributed 8 percentage points to the 8.7-percent GDP growth, said the NBS.

As a result of an imperfect social security system, average Chinese people are still buttoning down their pockets and making every cent count in spite of every effort the country has made to stimulate consumption.

This year, the country will implement more policies to improve social security to ease their saving anxieties.

China will raise pensions for enterprise retirees nationwide and allow employees to transfer their pension accounts when they move between provinces, said the State Council last December. At an executive meeting presided over by Premier Wen Jiabao, the State Council decided to raise the pension by about 10 percent from the 2009 level, or 120 yuan ($17.57) a month per person, starting on January 1, 2010. It is the fifth consecutive year that China has raised basic pension payments for enterprise retirees since 2005.

Many provinces and cities have decided to raise the minimum wages this year as the economy picks up and the government seeks to boost incomes. The wealthy coastal province of Jiangsu will increase its minimum wage by at least 12 percent in February. In Nanjing, capital of Jiangsu Province, the minimum monthly salary will be increased to 960 yuan ($141) from the current 850 yuan ($125).

Beijing may raise the minimum wage by 10 percent from the current 800 yuan ($117.6) per month as early as April 1, and Zhejiang Province, as well as Dongguan and Guangzhou in Guangdong Province, also plan to implement minimum wage raises.

With the adjustment in national income distribution, the Chinese Government is increasing its investment to improve people's livelihoods, a favorable condition for expanding domestic consumption, said Fan Jianping.

Given the positive influence last year's incentive policies on consumption in rural areas have exerted, the Chinese Government has decided to broaden and extend them this year.

A government-funded scheme will be initiated to expand building material sales in the countryside and encourage farmers to build better houses, said the No.1 Document released jointly by the State Council and Central Committee of the Communist Party of China on January 31, 2010.

The building materials for the countryside will bring about a demand of more than 700 billion yuan ($102.9 billion), said an analysis report by China Securities Co. Ltd.

The Central Economic Work Conference and the State Council executive meeting held in December 2009 has sent out policy signals that consumption incentive policies will continue and be enhanced this year.

The China Economic Annual Outlook Report 2010 released on March 1 by the Beijing Technology and Business University estimated that China's consumption can grow by 18 percent this year, propped up by a recovery of the world economy and a continuous domestic growth.

China's consumption ratio has been much lower than that of advanced countries, leaving great potential for improvements and substantial increases, said Zhang Wei, an analyst at Fortune Securities.