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Hurdles to growth
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During a rare online discussion with netizens on Wednesday, top legislators correctly pinpointed the declining share of individual income in GDP as the main culprit that has hindered consumption growth in China.

By enabling timely exchange of views between legislators and those whom they represent, introduction of such online discussions will surely add to the relevance of legislative work concerning issues of great public concern.

It is even more reassuring to know that top legislators have demonstrated deep understanding of the fundamental problems that can undermine economic recovery at the moment and change of growth pattern in the long run.

In response to netizens' worry about sluggish domestic demand, Lv Wei, a member of the NPC Financial and Economic Committee, stressed that household income as a proportion of GDP should be increased.

That is a suggestion to the point.

Statistics show that between 1997 and 2005, the proportion of labor income in GDP fell from 51 percent to 39 percent while that of corporate profit increased from 23 percent to 31 percent. That means an increasingly larger part of national income had gone into the pocket of enterprises while households were left to save more for rainy days in the absence of a sound social welfare net.

Worse, the widening income gap between the rich and the poor has made it extremely difficult for the government to persuade the majority of the public to loosen their purse strings at a moment when consumption growth is so badly needed.

As a result of the global economic crisis, shrinking overseas orders have forced the Chinese economy to reduce its dependence on export for growth. And enhanced fixed-asset investment raised wide concerns about not only sustainability of the recovery but also overcapacity in industrial sectors.

A radical policy change to boost household income growth as a portion of GDP seems to be needed more than ever.

Top legislators have made clear their opinion in this regard. But it is far from enough for them to restrict themselves to giving suggestions.

The national legislature must make more efforts to press the government to improve the distribution of national income among individuals, enterprises and itself.

In fact, government officials have already recognized the necessity to boost domestic consumption into a key growth engine for reducing the country's heavy reliance on exports and investments. But the old economic model just dies hard.

Given what is at stake if the country cannot shift rapidly enough to a more consumer-centric economy, legislators are required to play a bigger role in ensuring adequate government efforts to significantly tilt the distribution of national income in favor of Chinese consumers.

(China Daily August 28, 2009)

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