Home-grown boost to economy now essential, say experts Beijing needs to strengthen its education, medical, pension and other social welfare systems to encourage people to spend instead of focusing on saving for the future, the nation's top economic planner said yesterday. Ma Kai , head of the National Development and Reform Commission, told the China Development Forum in Beijing the central government must switch from relying on investment and exports to drive the economy, and focus more on stimulating domestic consumption. According to the China News Service, investment on the mainland rose to 44.8 per cent of gross domestic product last year, from 36 per cent in 2000, while consumption fell to 50.7 per cent of GDP last year from 62 per cent five years ago. 'This growth model of relying on investment and exports will increase the instability of economic growth, even though it can realise fast expansion in a short period of time,' he said. 'We need to adjust the distribution of income and raise the income level of urban residents. More important is that we must improve the lot of rural people and low-income people so that they are able and willing to spend more.' He said Beijing needed to foster growth based on innovation and technology instead of solely relying on cheap land, low wages and exploitation of resources. Advantages such as cheap labour would lose their effect as businesses were forced to spend more in other areas, such as the rising cost of production and environmental protection. 'We must push for innovations and creativity, and boost the economy through advanced technology,' Mr Ma said. 'What we have to do is to encourage consumers to change their demands for future consumption to demands that they want to realise in the near term.' Wang Mengkui, head of the State Council's Development Research Centre, told the forum China's resources constraints were more acute now than ever. 'The constraints of natural resources are more severe now than any time in the past,' Mr Wang said. 'This is a challenge we face in our quest to achieve sustainable development.' He said China faced four main limitations - resources and the environment, regional imbalances, underdevelopment of a support system to help various vulnerable social groups, and a fast-changing society with different interest groups - but said these problems were inevitable with development. Meanwhile, Tian Chengping , the minister of labour and social security, cautioned that the mainland must prepare for a fast-growing ageing population. 'As more young people flock to the cities to find jobs, the problem with elderly people left behind in the rural areas has become more acute,' Mr Tian said. More than 10 per cent of the 1.3 billion population is now over 60. He said problems with retirees would become more acute in the coming years as most of the country's privately owned businesses and self-employed individuals were not covered by insurance.