China has released a plan to boost consumer spending, marking a move to position domestic demand as the primary driver of its economic growth.
The proposal, issued by the General Office of the Communist Party of China Central Committee and the State Council, focuses on increasing consumption, encouraging domestic spending, raising incomes, and lowering financial pressures on households.
It highlights the need to create demand through high-quality products and services, enhance the spending environment to encourage consumer confidence and address key barriers limiting consumption.
The document, divided into eight sections, takes a comprehensive approach by tackling areas like income growth, better service consumption, upgrading big-ticket purchases, and improving the overall consumption ecosystem.
The plan outlines efforts to boost wages by strengthening job support in line with the economy and refining wage adjustment systems. It also suggests expanding income channels by stabilizing the stock market and offering more bond options suited for individual investors.
One proposal explores lawful ways for farmers to earn income from their property through rentals, equity partnerships, and cooperative arrangements.
The plan emphasizes traditional sectors like housing and cars and newer areas such as AI-powered products, low-altitude aviation, and tourism, focused on retirees.
Development of innovative technologies
China aims to accelerate the development of innovative technologies, including autonomous vehicles, wearable devices, ultra-high-definition video, brain-computer interfaces, robotics, and 3D printing, to create new growth in consumer markets.
There’s a tailored approach to different regions, with specific policies for rural areas, ice and snow tourism zones, and cities. Local governments will have the flexibility to adapt measures based on regional needs.
Areas with rich winter tourism resources will also be supported to help them become global destinations. Additionally, China plans to expand visa-free policies to boost inbound tourism and improve accessibility for international travellers.
The strategy aims to link consumer spending to broader societal goals, such as better childcare, eldercare, and work-life balance, to make consumption growth part of a broader push to improve quality of life.
China’s retail sales saw faster growth in January and February, which was a positive sign for efforts to boost domestic consumption. This comes despite rising unemployment and slowing factory output, pointing to ongoing economic challenges amid renewed U.S. trade pressures.
Top policymakers have focused on expanding domestic demand this year to offset the impact of U.S. tariffs on Chinese exports.
China’s leadership has set an economic growth target of around 5% by 2025. However, analysts warn this could be difficult due to weak exports, modest household demand, and a prolonged property market slump.
China’s annual parliamentary session
Recent data showed retail sales grew 4.0% in the first two months of the year, the fastest pace since late 2024, slightly exceeding December’s 3.7% increase. This growth was supported by strong spending during the Lunar New Year holidays, which included record box office revenue from the animated film “Nezha 2.”
Earlier this month, during China’s annual parliamentary session, leaders committed to stronger fiscal and monetary policies to boost consumption. This includes a 300 billion yuan ($41.5 billion) program to encourage the trade-in of items like electric vehicles and home appliances.
Economists suggest the subsidies helped support retail sales but warn that their impact may fade. Auto sales, for instance, already declined in the first two months of the year.
Data show sales of home appliances and audio-visual products rose 10.9%, while catering revenues increased 4.3% due to holiday demand, both improving compared to December figures.
On Friday, China outlined a “special action plan” with measures to improve consumer spending. This includes raising household incomes and introducing childcare subsidies to ease financial pressures.
Officials acknowledged weak consumer confidence and pledged to maintain sufficient liquidity in the banking system through tools like reserve requirement adjustments. However, given ongoing trade uncertainties, no immediate monetary policy changes are expected.
Unemployment remains a concern, with the urban jobless rate rising to 5.4% in February, its highest in two years. Adding to the pressure, U.S. tariffs on Chinese goods remain a significant economic challenge.
Industrial output grew 5.9% year-on-year in the first two months, down from December’s 6.2% but still beating market expectations. Fixed asset investment rose 4.1%, driven by improvements in infrastructure and property investments, though the real estate sector remains weak, with property investment down 9.8%.
Despite gradual signs of stabilizing, China’s housing market continues to face challenges, making it difficult for policymakers to maintain economic stability amid increasing U.S. trade tensions.
