With the same intention, China Securities Regulatory Commission (CSRC) announced this week that it plans to let non-deposit-taking institutions both home and overseas to offer consumer loans to Chinese citizens in pilot cities like Beijing, Shanghai and Tianjin.

According to CSRC's plan, debtors will be able to borrow loans so long as they are less than five times of their monthly income.

Government stimulus policies have been playing a big part in consumption growth, such as reducing purchase taxes for small cars and subsidies for farmers to buy agricultural equipment, said Yuan Gangming, an economic researcher at Tsinghua University.

Export: weakening, but significant

In sharp contrast with the booming domestic market, China's export is facing continuous slump from the fourth quarter last year.

Exports fell 22.6 percent in April from a year earlier to US$91.94 billion, steeper than the 17.1-percent decline in March, according to the General Administration of Customs.

Long-term orders had been continuously cut into smaller and shorter ones by foreign buyers, which would make exporters' benefits unstable and unsustained, according to a report on the Web site of the Ministry of Commerce (MOC).

Canton Fair, China's leading trade fair that ended early this month, saw export orders fall by 16.9 percent from last year.

However, the MOC report had stressed that stabilizing external demand was key to maintaining growth, as the "grim" impact could affect "all sectors" of the economy.

Sluggish external demand, which had a significant bearing on stabilizing exports and employment, could deter domestic investment and consumption for a long period, it said.

Restructuring: a long-term battle

Despite favorable economic data on domestic demand, economists had warned that time for China to retool its economy for domestic consumption might be longer than expected.

"There is still a long way to go," said Li Daokui, pointing out that the infrastructure-focused government spending and rising domestic consumption could provide stable and continual energy to economic recovery, but it might not be the solution in the long run.

Consumption had been rising, but far from enough, as it had so far accounted for only 38 percent of China's GDP, which was not adequate to become a pillar for long-term growth, he said.

Xie Guozhong, economist and board member of Rosetta Stone Advisors, said during the second Lujiazui Forum over the weekend that consumption boosted mainly by government stimulus could only temporarily keep the economy from going down.

Economic restructuring would only be completed when consumers are provided with abundant fortune, which means the government needs to do more to increase family incomes, he said.

Coinciding with economists' opinions, the government is planning to move further on its way to a consumption-heavy growth model.

Wang Yiming, vice president of Academy of Macroeconomic Research under NDRC, pointed out that China's next step would be further consumption expansion through either offering direct purchase subsidies or perfecting social security system.

The government's affordable housing projects and further implementation of health care reform are included in building a perfect social security system, said Xu Lin, head of the Department of Fiscal and Financial Affairs, NDRC.

(Xinhua News Agency May 21, 2009)