Analysis
BEIJING – A new plan to expand consumer spending unveiled on Sunday is expected to encourage consumption and drive economic growth in China. The country has maintained its position as the world’s second-largest consumer market and largest e-commerce market for over a decade.
Data released yesterday shows that retail sales of consumer goods – a major indicator of the country’s consumption strength – climbed 4 percent year on year in the first two months of 2025, 0.5 percentage points higher than the same period in 2024.
Despite the positive data, consumer confidence remains weak due to multiple factors, and it remains imperative that consumption is boosted and domestic demand is expanded, Li Chunlin, deputy director of the National Development and Reform Commission (NDRC), said at a press conference yesterday.
The plan is composed of 30 policies across eight sections, the first seven of which outline specific actions for implementation, including demand-side initiatives such as income enhancement for urban and rural residents, and measures to support consumption capacities.
On the supply side, actions are aimed at improving the quality of services consumption, upgrading bulk consumption and enhancing consumption quality.
The eighth section emphasizes the need to enhance supportive policies related to investment, finance, credit and statistics.
STOCK, REAL ESTATE MARKET STABILITY
For the first time, the consumption support plan emphasizes the need to stabilize the stock and real estate markets.
Previous consumption policies focused primarily on the supply side, emphasizing that supply drives demand creation. However, the latest policies also prioritize the demand side, aiming to boost household incomes and ease financial burdens, Li noted.
He cited measures such as those related to reasonable wage growth and scientifically adjusted minimum wages, both of which are highlighted in the consumption support plan.
To enhance property incomes, the plan calls for a multifaceted approach, including the stabilization of the stock market, strengthened strategic reserves and market stabilization mechanisms, and the accelerated removal of barriers preventing long-term funds – such as commercial insurance funds, the national social security fund and the basic pension insurance fund – from entering the market.
To meet housing consumption needs in an improved manner, efforts will focus on curbing the downturn and restoring the stability of the real estate market, according to the plan.
Financial authorities have been encouraging medium and long-term funds to enter the capital market to stabilize stock performance further.
Since last year, Chinese policymakers have introduced a range of measures, including financial stimuli and regulatory adjustments, to bolster the property sector. These include mortgage rate cuts, decreased down payment requirements, eased purchasing restrictions and financing coordination mechanisms to enhance funding support for developers.
BETTER CONSUMPTION, WELL-BEING
By connecting consumer spending to broader social goals like elderly care improvement, child care support and work-life balance, the plan embeds consumption growth within China’s broader development objectives, signaling that consumption is being positioned not just as an economic goal but as a means to enhancing quality of life.
Solid investments will continue to be made. For example, ultra-long special treasury bonds totaling 300 billion yuan will be issued to support consumer goods trade-in programs in 2025, doubling the 2024 figure.
The programs, which kicked off last March, drove equipment purchases and investment up by 15.7 percent in 2024, contributing 67.6 percent of overall investment growth, and boosted sales of bulk durable consumer goods by over 1.3 trillion yuan, according to the NDRC.
Following its “employment first” policy, the central government plans to allocate 66.74 billion yuan in employment subsidies in 2025 to support local employment and startup assistance programs, said Fu Jinling, an official of the Ministry of Finance.
China will consider establishing a child care subsidy system. It will guide eligible regions to include rural migrant workers, individuals engaged in flexible employment, and individuals engaged in new forms of employment who are covered by the basic medical insurance for employees, in the country’s childbirth insurance program, according to the plan.
Regarding elderly care, the country will increase fiscal subsidies for basic old-age benefits and basic medical insurance for rural and non-working urban residents in 2025. Additionally, basic pension benefits for retirees will be raised appropriately.
The country will work to implement its paid annual leave system, ensuring that workers’ rights to rest and vacation are legally protected. It will also prohibit the unlawful extension of working hours, according to the plan. – Xinhua
