Zheng Xinli，director of Policy Research Office of the State Planning Commission，recently proposed that，during the past ten or so years，China’s domestic consumption has developed significantly making it due for structural upgrading. The four economic “engines” of foodstuffs，clothing and household necessities，housing，automobile and tourism have started in full range in the consumption field，which will enable China’s economy to remain continuous and enjoy high rate of growth at the turning point of the century.

Zheng Xinli says that in the current residents’ consumption structure of developed countries，the consumption in these four areas generally takes up a fourth respectively. These four consumption fields can be seen as four “engines” that drive forward economic growth. Since the reform and opening up，the engine of foodstuffs，clothing and household necessities was started in the first place，supporting twenty years of consistent high-speed growth of China’s economy. If the other “engines” like housing，transport and tourism are started at full speed，these four “engines” will surely drive economic growth at high speed in a longer term.

In the beginning of the 1980s，we implemented the land system of contracted responsibilities on the household basis with remuneration linked to output surrounding the issue of foodstuff，followed by continuous high speed growth of agriculture，which laid the foundation for high speed economic growth as a whole. Simultaneously，surrounding the issues of clothing and household articles，we carried out the “six priorities” policy in the light textile industries，followed by higher than 20% high speed growth for many continuous years，thus supported high speed national economic growth. Since the 1990s，surrounding the issues of transportation deficiency，difficulties in telephoing and deficient electricity supply，the State intensified the efforts of investments in transportation，communications and electric power industry，thus mitigating the bottleneck constraints holding back consumer structure upgrading for years.

Zheng Xinli says that with the rise of comprehensive buyer’s market，China was farewell to “shortage economy”. At the same time the restraining action of market mechanism on demand is being reinforced continuously. The period since last year witnessed new situations characterized by weak markets and lacklustre sales. Considerable production capacity was set aside，accompanied by severe overstocking of commodities. For the first time，China was faced with a surplus of production which in the past was only read in textbooks，and there truly was insufficient demand. The flourishing of market demand determines the speed of economic growth.

China’s GDP per capita is only a little more than USD 800，still in the league of low income countries in the world. Why is there insufficient demand coupled with such low level of consumption？We should think it over in depth.

Foodstuff，clothing，household necessities，housing and transport are the most basic material life consumption of human kind. At present，in cities and towns，the residents demand for foodstuffs，clothing and necessities have basically been satisfied. According to the general laws of structural upgrading of foodstuffs，clothing and household necessities，consumption hot spots of consumption demands from thousand RMB Yuan grade home appliance to ten-thousand RMB Yuan grade housing and transportation will enlarge endlessly，and relevant industries surrounding the satisfaction of housing and transportation demands will witness a high speed growth period and become new points of economic growth. Since 1992，the balance of China’s residents bank savings deposits soared from RMB 110 billion to RMB 500 billion，and taking into account finance and securities，residents personal financial assets amounted to RMB 800 billion. This shows that a substantial part of families have attained the conditions of consumption structure upgrading from the domination of foodstuffs，clothing and household necessities to domination of housing and transportation.

Zheng Xinli holds that，due to factors of institutions and policies，in terms of housing and transportation consumption in cities and towns，public welfare-oriented，supply-oriented and group-oriented consumption mode has not been broken，and consumer products used for housing and transportation and the consumption behavior still have not been included in the field of personal commodity consumption，which render the consumer demands in these two aspects remain at a repressed and deformed development status，such that relevant industries surrounding housing and transportation cannot attain normal and sufficient development.

Taking the proportion of consumption of housing in the consumption expenditure as a whole，in 1997，residents in cities and towns only take up 8.6%，while it was 14.4% for residents in the rural area. And yet，the income gap between them is 2.5：1. Logically，housing consumption of residents in cities and towns in the consumption structure should be higher than that of rural area residents. The crux of the problem lies in the fact that housing of rural residents is a personal consumer product，while commercialization reform of housing in cities and towns proceeds too slowly，which has become a main hindrance against the healthy development of housing industry in cities and towns. In developed countries，as an important constituent of the national economy，the added value of the real estate industry makes up more than 10% in the GDP. Since a sound housing market has not been formed in China，the housing industry only takes up 2.6% in the GDP. If the proportion of the housing industry could increase by one percentage point in the GDP，this will be a tremendous driving power for economic growth.

And taking the automobile market as an example，the present ownership of automobiles in China is 12，190，000，including private cars which takes up 29.4%，which are mostly in the rural area and comprise mainly trucks used for commercial operations，and among which there are few family cars used for personal trips. In the last year，the sales of agricultural vehicles in China reached 1，800，000 units，exceeding the sales of passenger cars. Due to the effect of home-grown policies and irregular charges at local areas，the growth rate of the automobile market has decreased from higher than 20% in the beginning of the 1990s to a depressing condition of less than 5%. Currently，China is building highways which require the support of a developed automobile industry. In cities，towns and the rural areas in developed coastal areas，the GDP per capita has exceeded USD 2，000. From the point of purchasing power，the necessary market conditions are fulfilled. In recent years，China’s automotive industry has progressed with a favorable foundation for development through well-planned large scale input and introduction of advanced technologies and management. Aimed at improving the travel conditions of the residents，the automotive and such other transportation equipment industries such as railways，air travel and waterways are now justified in receiving attention for development.

In order to improve the housing and transportation conditions of the residents，we should consider and resolve it by an overall master plan. Presently，the prices of houses in big cities are too high，which is primarily caused by the absence of swift means of transportation and residential concentration which raise land prices to high levels. If we could build up residential areas with complete supporting facilities at the suburban areas with mountains on one side and water on the other，and link them to the downtown area via light rail or express ways，the residents will willingly choose to reside at the suburban area filled with fresh air and quiet environment. This will effectively curb the excessively high land price in the downtown area，and cause all industries surrounding housing and transportation to develop in a balanced manner with integrated dependencies.

Leisure tourism consumption has quietly emerged in China. In 1997，domestic tourism produced a total revenue of RMB 21，120 million. And according to a survey conducted in Beijing，Shanghai and Guangzhou，80% of the citizens traveled abroad at least once. Among which，the proportion of per capita tourism input from RMB 1，000 to RMB 10，000 made up 29% of the total.

At present，in the housing and transportation consumption fields，the excessive and redundant charges are important factors constraining the enlargement of housing and transportation consumption and the development of related industries. All industries treat housing and automobiles as “Tang Priest’s flesh”，and all of them want to earn a share. Although more than forty items of charges on housing have been eliminated，this only takes up about 2% of all “unreasonable” charges. Of the retail price of automobiles，many additional price charges make up 30%-40% of the retail price. We should progressively change such charges into taxes and establish standardized and transparent management systems so as to create favorable institutional and policy environments for the enlargement of consumption in housing and transportation. In the meanwhile，we spontaneously carry out the transformation of consumption mode from self-accumulation to credit support.