ABSTRACT
This study was stimulated by the coincidence of two recent and major policy shifts in China: the new emphasis on domestic demand and a more inclusive defi nition of development to include the social. Just before the turn of the twentyfi rst century and since, there has been an emerging consensus in China around the importance of consumption-led growth or developing domestic demand or an internal market which has been designated variously as a ‘new source’, the ‘new impetus’ or the ‘main engine’ for China’s long-term economic growth. In 1998 a new Five Year Plan advocated ‘giving full play to the advantages of our domestic markets which are large and have great potential’.1 A year later, Zhu Rongji, China’s then Premier, openly acknowledged that the greatest of China’s economic problems was ‘lack of demand at home’.2 In 2002, at the Fifth Session of the National People’s Congress, China’s Premier designated expansion of domestic demand as ‘a long-term strategic principle’ and ‘a fundamental plan for realising a relatively rapid economic growth to further stimulate consumption and investment’.3 In April 2003, the front pages of the national media reported that the fi rst of the top twelve priorities set by the State Council was ‘continuing the expansion of domestic demand’.4 Henceforth the boosting of domestic demand in China, long the subject of foreign interest, was to be given priority in planning for a shift from investment-led to consumption-led growth. Henceforth much of the debate was to centre around the quality as well as pace of economic growth. In 2003 for instance, the authoritative and infl uential Beijing-based periodical, Outlook Weekly, urged that, at this current stage of China’s development, expanding consumption was more important than increasing investment and that enhancing the ability and desire to consume rested not only on improving the consumption environment via improved marketing facilities and credit opportunities, but also on social and economic policies to increase incomes, reduce inequalities and secure China’s all-round development’.5 This article was interesting because it drew attention to a number of major constraints inhibiting the growth of a fl ourishing domestic market, chief of which, it suggested, was China’s uneven development.
