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McKinsey: Spending boost needs policy tweaks

By Ding Qingfen | China Daily | Updated: 2009-08-22 08:29

China may have an extra domestic consumption worth $1.9 trillion by 2025, if the government adopts more aggressive reform programs covering a wider range of financing policies, job-driven investment projects and a stronger social safety network, according to a report released on Friday by global consultancy firm McKinsey.

These programs, when implemented, will boost the nation's share worldwide to 13 percent, 4 percentage points higher than if without them, and raise the ratio of domestic consumption to China's GDP to 50 percent, said the report.

Despite China's top position as a consumer market worldwide, the nation is still lagging far behind when it comes to the consumption-to-GDP ratio. In 2007, China's domestic consumption totaled $890 billion, making it the fifth-largest consumer market, following the US, Japan, UK and Germany. The nation's consumption-to-GDP ratio of 36 percent, is half that of the US and about two-thirds of Europe and Japan.

McKinsey: Spending boost needs policy tweaks

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