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China's Executive Vice Premier Li Keqiang Promises to Boost Domestic Demand
by World Economic Forum
Davos-Klosters Switzerland, 28 January 2010 − China will boost domestic demand to drive economic growth as it continues to maintain a moderately easy monetary policy amid economic uncertainties, Li Keqiang, Vice-Premier of the State Council of China, told the World Economic Forum Annual Meeting participants in Davos.
Li said that domestic demand contributed 12.6 percentage points to GDP last year, making up for the loss of 3.9 percentage points caused by contraction of external demand.
“China’s domestic market has huge potential. We will strive to expand domestic demand, especially consumer demand.”
Asked how he intended to do it, given the Chinese penchant for saving, Li said that while the Chinese people are famous for their hard work and frugality, he believed they have a stronger aspiration to live a better life. He cited an example of how the government raised domestic demand last year when it subsidized the purchases of household appliances by farmers.
China’s GDP grew 8.7 percent last year, or an increase of US$ 380 billion. “China’s contribution to world economic recovery is obvious,” Li noted. In response to the global financial crisis last year, the government stimulated demand through increased public spending and tax cuts.
The Chinese Vice-Premier cautioned that the economic environment remained uncertain, “and the road toward China’s further economic development this year is beset by extreme complexities.” He added that “to tackle these problems, we will keep continuity and stability of our macroeconomic policies, continue to follow a proactive fiscal policy and a moderately easy monetary policy.”
In his wide-ranging speech, Li also called for more open market and international cooperation to tackle major challenges and improve the structure of global governance.
Click here to view the video of Li Keqiang's speech.
Key Points
• China will boost domestic demand, especially consumer demand, to drive economic growth
• The move will open up huge market opportunities for individuals and businesses
• Growing domestic demand contributed 12.6 percentage points to China’s GDP last year, making up for the 3.9 percentage point contraction of external demand
• Economic uncertainties abound, so China will continue to maintain stable macroeconomic policies, a proactive fiscal policy and a moderately easy monetary policy
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