By Kirby Chien
BEIJING (Reuters), Nov 6 - China's emerging consumer class is shaping up as a magnet for companies as Beijing steps up domestic spending and the slowing global economy hits exports, the country's traditional engine for growth.
China is already the world's fourth-largest economy, but consumer spending accounts for only 39 percent of economic growth, compared with two-thirds of growth in mature economies such as the United States.
Beijing was worried about a real estate bubble only a year ago when it clamped down on speculative buying, but then it reversed direction in October with cuts in property transaction taxes, mortgage rates and down payments.
"Government measures will be a big help," Pan Shiyi, the chief executive of property firm SOHO China (0410.HK: Quote, Profile, Research, Stock Buzz), said at the Reuters China Summit on Thursday.
"But it's not enough, China is tied inextricably to the global economy," he said.
The country's economic growth slowed sharply in the third quarter as factories closed and profits fell, prompting a raft of pro-growth measures, including three cuts in interest rates in recent weeks.
A parade of senior officials have also been busy talking up the need for state measures to spark domestic consumption.
The central bank has stopped imposing strict lending limits on banks to ease the impact of the credit crisis, said state media.
These steps are good news for companies such as China's top e-commerce firm Alibaba.com Ltd (1688.HK: Quote, Profile, Research, Stock Buzz), which expects half of its revenue will come from domestic trade within three years from one-third now.
"We are seeing a much higher revenue growth from China domestic trade," said Joseph Tsai, the chief financial officer for the Alibaba group.
Alibaba slashed its membership fee for exporters by 60 percent this week to attract more business, but kept its pricing for domestic traders unchanged.
The sagging property sector, which accounts for a quarter of total fixed-asset investment, is not the only sector targeted by authorities in an effort to boost growth.
China's vast under-developed rural areas hope to benefit from Communist party goals to double rural incomes by 2020 [ID:nPEK81491], and the restructuring for Agricultural Bank of China that could eventually total $100 billion.
China's largest feed producer, New Hope Group, the parent of New Hope Agribusiness Co (000876.SZ: Quote, Profile, Research, Stock Buzz), is planning to invest more than $146 million this year and increase that next year to rapidly expand its pork, chicken and milk production.
"It is a great opportunity that has the support of the government," said New Hope Group Chairman Liu Yonghao, who expects revenues to double over the next five years.
That opportunity contrasts with the declining number of people employed in the manufacturing sector, as has been reported in recent surveys.
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