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Chinese consumption demand to remain stable

China's consumption demand will remain stable in 2005, economists said, but it will play an increased role in economic development.

Zhang Liqun, a senior researcher at the State Council Development Research Centre, said the country's consumption demand would not experience any major fluctuations this year.

"Ordinary people will not increase or reduce their consumption," he said.

Zhang's remarks were backed by Jiang Bing, a 32-year-old lawyer working in Beijing, who said he has no major spending plans this year.

Jiang's case was not an isolated one, Zhang said. He predicted China's retail sales, an important barometer of consumption demand, will grow this year by 13 percent to 14 percent.

But consumption's contribution to the gross domestic product will increase, as a result of the effect of the government's macroeconomic control measures on investment, one of the three engines of the country's economic development, he said.

But strong imports will also reduce the country's trade surplus, another major economic driver.

Peng Longyun, a senior economist at the Asian Development Bank, agreed that consumption demand would remain at a similar level to last year, which rose a year-on-year 13.3 percent.

"People's purchasing power, built up during the past few years, will continue to be exerted in 2005," he said.

Personal incomes will also continue to grow, as the government has decided to take measures to co-ordinate the relationship between consumption and investment, he said.

People remain generally optimistic about the future, he said.

"If there are no major unpredictable events such as the SARS (severe acute respiratory syndrome) outbreak, the country's consumption demand will not decline, nor will it increase rapidly," he said.

Retail sales will grow by more than 10 percent this year, he said.

Qi Jingmei, a senior economist at the State Information Centre, said the country's consumption demand will continue to grow at a double-digit rate.

But the rate will slow slightly compared with last year, she said.

"The country's fixed asset investment and industrial output will decline in 2005," she said. "Growth in the gross domestic product will also drop."

Slower economic growth will also affect people's income growth to a certain extent, she said.

Rural people's incomes will not maintain the high level of growth that was seen last year.