From Overseas Press

China creating new generation of consumers

(chinadaily.com.cn)
Updated: 2011-03-15 11:29

By starting the world's largest housing investment program, China will create a new generation of consumers, said an article in New York Times on March 14.

According to the article, as part of its new five-year plan for 2011-2015, China will build 10 million affordable homes this year and 36 million units over the period, which amounts to housing the combined populations of France, Australia and Canada, with three people to an apartment.

In the short term, the article said, the program will stimulate China's appetite for steel, copper and other materials, benefit commodity exporters and guarantee its investment rate of 48 percent of gross domestic product.

If the goal is reached, the article said, China will have created a new class of consumer. Theoretically, millions of Chinese will no longer have to save their money for "an exorbitant, market-priced home." And with more people living in cities, they will spend more on a variety of goods and services.

Louis Kuijs, an economist at the World Bank in Beijing, said in the article that he had not expected that the government was putting so much effort into affordable housing. "I wouldn't be surprised if big efforts like this also raise confidence in the economy," Kuijs said.

Stephen Roach, nonexecutive chairman of Morgan Stanley Asia, also said in a Project Syndicate column that the five-year plan is expected to "spark the greatest consumption story in modern history."

While sowing the seeds for greater consumption, the article said that the huge new supply of apartments will curb rising property prices and also ease discontent among ordinary Chinese.