Consumption stimulus to extend into 2010

• Source: Global Times
• [03:56 November 24 2009]
• Comments

By Wang Xinyuan

Stimulus policies spurring domestic consumption will be maintained next year, while high sales growth of home appliances and automobiles due to the stimulus packages will not affect consumption in 2010, analysts predict.

China launched a series of stimulus programs following the global financial crisis to boost domestic consumption, including rebate programs to farmers who buy home appliances from qualified vendors, tax cuts for purchases of low emission cars and vehicle upgrade subsidies for rural residents.

The country saw 10.9 million automobiles sold in the first 10 months of this year, up 37.8 percent over the same period last year, the China Association of Automobile Manufacturers said in early November.

Meanwhile, retail sales nationwide grew by 15.1 percent, or 17 percent without pricing factors, in the first three quarters. Consumer spending contributed about 4 percent of China's GDP, according to the National Statistics Bureau.

The high growth of auto sales this year will not affect consumption next year, according to Li Haiying, an analyst at Anbound Consulting.

"The growth this year was mainly caused by the release of suppressed demand held over from 2008," Li said. "The policies to boost car sales will most likely stay next year, or new policies such as auto finance and credit will possibly come out."

She estimated that auto sales would grow about 20 percent this year, excluding the demand from 2008, and continue to grow about 10 to 15 percent in 2010.