Chinese officials have announced a comprehensive plan to boost domestic consumer spending, a strategic move that comes as trade tensions with the U.S. threaten to impact China’s export-driven economy.
The initiative includes financial tools, rebate program, and targeted sector development to revitalize sluggish economic growth.
The People’s Bank of China is exploring new mechanisms to increase low-cost funding for key consumption areas, according to central bank representative Che Shiyi. Meanwhile, the National Development and Reform Commission has already distributed 81 billion yuan ($11.2 billion) to local governments for rebate programs aimed at stimulating auto and appliance sales.
Economic indicators for early 2024 show some positive signs. Retail sales increased 4% in January and February compared to last year, exceeding forecasts, while industrial production rose 5.9%. These stronger-than-expected figures helped boost Asian stock markets.
However, significant challenges remain. Fu Linghui from the National Bureau of Statistics acknowledged that “the external environment has become more complex and grim, domestic effective demand is insufficient… and the foundation for the continuous recovery of the economy is still unstable.”
The ongoing real estate crisis continues to hamper consumer confidence, with real estate investment falling 9.8% in the first two months of the year. While the rate of price decline has slowed substantially, economists don’t anticipate a rapid rebound in the property market.
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The U.S.-China trade relationship adds another layer of uncertainty. President Trump has imposed a 20% tariff on Chinese products and recently reaffirmed his intention to implement additional tariffs in April, potentially dealing another blow to China’s export sector.
China’s multifaceted approach includes developing AI-related products, promoting winter tourism, and expanding social safety nets for the elderly and rural residents. The government has also doubled its appliance and automobile trade-in rebate program to 300 billion yuan for 2025.
Economic analysts see these measures as evidence of China’s determination to address its consumption challenges, though some note the plan lacks specific details on implementation.
Read more: China outlines plans to boost consumer spending as Trump’s tariff war threatens exports
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