China hopes to stem spend­ing power out­flow

The Pak Banker - - 6BUSINESS -

China is hop­ing mar­ket lib­er­al­iza­tion and giv­ing firms in­cen­tives to pro­duce bet­ter prod­ucts and im­prove ser­vices will per­suade the coun­try's grow­ing middle classes to spend their money in­side the coun­try rather than abroad.

Chi­nese spent 1.2 tril­lion yuan ($184.86 bil­lion) over­seas last year, said a spokesper­son for the top eco­nomic plan­ner on Mon­day.

Zhao Chenxin, of the Na­tional De­vel­op­ment and Re­form Com­mis­sion, said at a press con­fer­ence that China had a short­age of high-end com­modi­ties and an "un­sound con­sump­tion en­vi­ron­ment."

To fix this, the govern­ment will open the mar­ket wider to pri­vate cap­i­tal and loosen re­stric­tions on for­eign en­ter­prises, while en­cour­ag­ing in­no­va­tion among all firms, said Zhao.

The spokesper­son also promised stricter reg­u­la­tions to pro­tect in­tel­lec­tual prop­erty and guar­an­tee prod­uct qual­ity.

Other mea­sures will in­clude open­ing more duty-free shops, ex­plor­ing new chan­nels to ex­pand im­ports and de­vel­op­ing con­sumer credit ser­vices.

China's growth model used to be based on trade, in­vest­ment and heavy in­dus­try, but it is now be­ing shifted to rely more on con­sumer spend­ing.

In 2015, con­sump­tion con­trib­uted 66.4 per­cent to GDP, up 15.4 per­cent­age points from 2014. The ser­vice sec­tor con­trib­uted 50.5 per­cent to the econ­omy last year, up from 48.1 per­cent in 2014.

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