(MENAFN- ProactiveInvestors - Australia) China's attempts to boost domestic demand by raising incomes and spending more on infrastructure relating to public welfare, may be starting to bear fruit.
In 2012, consumption contributed 51.8 percent of the country's GDP growth, overtaking the 50.4 per cent contribution by investment.
China will stimulate domestic consumption and improve the efficiency of government investment in order to expand demand, National Development and Reform Commission (NDRC) head Zhang Ping said this week.
In cities, the government will create more jobs and boost salaries in a way that won't damage enterprises' efficiency, Zhang said.
While in rural areas, the government will raise the state purchase price of farm produce this year and make it easier for rural residents to work in cities.
Additionally, more public spending on education, social security and healthcare will reduce the need to maintain large savings accounts and increase people's willingness to spend, Zhang said.
China's central budget for 2013 features notable spending increases in areas closely related to quality of life, including education, healthcare, social security and public housing.
Zhang also said the government will focus on infrastructure that benefits people's lives, such as public housing, hospitals, schools and the renovation of dilapidated houses in rural areas.
More government money will go to irrigation facilities, rural roads, power and water supplies in rural areas, as well as utilities in cities, he said.
In underdeveloped west China, the government will continue to build highways, railways and airports, he added.
PMI boost
China's official purchasing managers' index (PMI) for the non-manufacturing sector rose to 55.6 in March from 54.5 in February, adding to signs of a modest uptick in the world's second-largest economy.
The move higher was driven by activity in the construction sector, whose sub-index jumped 4.5 points from February to 62.5 in March, according to the survey from the National Bureau of Statistics.
The construction industry has been a major beneficiary of government infrastructure spending, with about $150 billion worth of projects given the green light in 2012 as part of an effort to engineer a rebound in economic activity as GDP growth slowed last year to a 13-year low of 7.8 per cent.
Recovery and growth broader based
The recovery's broadly mild nature was evident in overall new orders in the services sector, which nudged up just 0.2 index points to 52.0 in March from February.
A PMI reading above 50 indicates activity is accelerating, while one below 50 indicates it is slowing.
Services sector taking up slack
A rise in new orders was broadly evident across multiple service industries.
The internet and software information industry, the hotel industry, telecommunications, broadcasting, television and satellite transmission services, retailing and real estate industries all saw new orders staying above the 50 point level, suggesting a growing market demand.
China's services industry has so far weathered the global slowdown much better than the factory sector.
Growth in China's increasingly important services sector had expanded at its slowest pace in five months in February, although environmental protection and retail maintained robust growth, with their sub-indices hovering over 60.
All of which point to a firming of domestic demand that was also detected in Monday's manufacturing sector surveys. Domestic demand was the key factor driving a rebound in factory activity in March.
China's economy appears to be on course for a steady but recovery this year, with infrastructure investment and household consumption helping compensate for softening demand for Chinese exports.Â
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