Chinanews, Beijing, Feb.8 – Compared with investment, China’s consumption rate might still be relatively low. Some experts recently predicted that China’s ultimate consumption rate (the rate of total consumption figure to that of GDP figure) in 2006 might fall below 50% to hit a historical low point again, the Economic Information Daily reported.

 

In regard to Chinese consumption, experts always hold diverse opinions about this issue. Some people think that at the present economic stage, China’s low consumption figure is “not a big issue”, as it will surely increase in future.

 

As China enters into an aging society, some experts expect that the large savings in banks will flow into the consumption field.

 

Economic figures released for 2006 seem to support such view. In 2006, the total retail sales of consumer goods reached 7.64 trillion yuan, increasing by 13.7% from last year, or 0.8 percentage points higher than the related growth rate of the previous year. Since both the residents consumption price and the prices of retail goods witnessed small growth rates, the actual growth rate of the total retail sales of consumer goods was even larger than it seemed to be.

 

However, compared with investment and trade growths, consumption still grew rather slowly. In 2006, when the total retail sales of consumer goods grew by 13.7%, investment in fixed assets increased by 24% and import and export volume rose by 23.8%. For a long time, the consumption growth rate had fallen behind that of investment and export. As a result, its proportion in GDP figures has kept declining. Statistics show that China's ultimate consumption rate fell by 10.5 percentage points in the past ten years, from 62.4% in 1992 to 51.9% in 2005. At the same time, residents' consumption rate fell from 47.2% in 1992 to 38% in 2005, or decreasing by 9.2 percentage points during the same period. Both the two figures hit historical low points.