Shanghai January 17 (Gasgoo.com) A government report at yesterday's opening ceremony of the fourth session of the 13th Municipal People's Congress in Beijing placed special attention on national economic growth target of 8%. The question now is what effects the vehicle purchase limitation policy will have on economic development.
Executive vice mayor of Beijing Ji Lin said that the economic situation this year is more complicated then it was in 2009, and that achieving growth goals while preserving stable, long-term prices would be difficult. In response to participant's enquiries, Mr. Ji said that Beijing has two important economic issues to tackle during the current Five-Year Guideline (2011-2015): the first challenge being implementing motor vehicle control policies, and the second being dealing with the 91-year old Shougang’s Group announcing that it was stopping all production.
Responding to questions regarding vehicle purchase limitation policies, pointed out that Beijing’s economy relies on the balance between investment and consumption. In the past few years, consumption has been the relatively dominant force, with automobile purchasing constituting one-fourth of total retail sales volume (miscellaneous related transactions such as buying fuel bringing that figure up to around one-third.) In the past year over 80,000 new vehicles were added to the capital’s streets. With the purchase limitation policy put in place, increase is expected to drop to only about 20,000 vehicles, equivalent to a 50 billion-60 billion yuan ($7.59b-$9.1b) loss in retail sales.
Vice-Mayor Cheng replies to worries across the automobile market
Cheng Hong, vice-mayor of Beijing and representative to the People’s Congress, responded to questions concerning the influence of the vehicle limitation policies on the automobile market in an interview with the Beijing Youth Daily yesterday. He said that currently the government was considering three measures to compensate for the economic loss the automobile purchase limitations policies cause.
The first method would be to increase regional consumption in other sectors. With current regional consumption making up around 55% of the total consumption market, the government will work hard this year to improve community satisfaction, optimize the sales environment and allow consumers to make purchases easier. The second method would be to improve consumption structure, offering average consumers with high-quality goods. With appliances costing more then four times then what they cost a mere few years ago, especially because of post-purchase transactions including service fees and the like, the city has a lot of margin to reduce prices. The third method Mr. Cheng mentions is increasing tourist and other foreign consumption. With Beijing seeing 150 hundred million domestic tourists and over four million foreign tourists coming to visit annually, with their combined consumption constituting a quarter of total retail sales volume, this sector contains large potential to grow. The next step is to step up production of regional goods and construction of business streets to further attract foreign spending.
