Foreign media focus on China's economic transformation (2)

Expanding domestic demand

The foreign media have realized that a key part of China's economic transformation is the expansion of domestic demand and less reliance on the existing export-led growth model.

The Associated Press said in a commentary that fueling domestic consumption, including subsidies for social programs and higher spending for businesses, has become a major goal of the Chinese government. The country will offer increased assistance and programs to benefit a wide array of groups: higher minimum wages, heftier subsidies for education and farmers, more loans for strapped private businesses, and added help for troubled exporters.

Chinese Premier Wen Jiabao said that expanding domestic demand was a key focus this year, announcing increased investment in low-cost housing, social security, education and higher wages as Beijing seeks to reverse "the trend of a widening income gap," according to an AFP report.

BBC cited Premier Wen as saying that expanding domestic demand, particularly consumer demand, is essential to promoting China's economic transformation and ensuring steady, robust economic development, and is the focus of the country's economic work this year. In addition, ensuring steady investment growth is also a major task.

Wen also announced a series of social welfare measures as the government grapples with widening income inequalities. These measures include boosting spending on education to 4 percent of GDP, extending the coverage of the pension system to all urban and rural residents, and increasing subsidies for medical insurance, The Hindu reported.

Promising prospects

Despite some doubts, foreign media outlets are generally optimistic about China's economic transformation.

"It also remained to be seen whether the (Chinese) government would be able to deliver on its pledge to shift economic growth to consumer demand," The New York Times said. Many of the structural changes crucial to economic restructuring have been hamstrung by internal political resistance, but the newspaper remains optimistic about China's economic growth. With a "markedly upbeat assessment of the state of the nation," Wen dismissed "concerns of many economists about the ballooning debt burden of local governments and the potential for a real estate bubble," indicating that both problems are under firm state control.

"The benchmark S&P 500 is up 8.5 percent so far this year on investor expectations for a recovery in the U.S. economy, a containment of the euro zone's debt crisis and the belief that China will avoid a hard landing in its current economic cycle," Reuters said.

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