People enjoy a meal at a restaurant in a historical block in Nanhu district of Jiaxing city, East China's Zhejiang province. [Photo/Xinhua]
Editor's note: China recently issued a special action plan for boosting consumption, focusing on enhancing consumption capacity, releasing consumption willingness, optimizing consumption environments and unlocking consumption bottlenecks.
This comprehensive policy package introduces far-reaching measures to refine institutional mechanisms for consumption promotion, unlock new market potential, and accelerate China's shift toward a consumption-driven economic growth model.
Let's take a look at how the special action plan will facilitate consumption.
An employee works on a machine tool assembly line in Chongqing on Feb 22. WANG QUANCHAO/XINHUA
The plan aims to increase residents' income with a multi-pronged approach, focusing on:
-Promoting reasonable growth in wages.
-Expanding channels for property income.
-Implementing diverse measures to raise rural incomes.
-Resolving payment arrears to enhance consumption circulation.
Wang Jingwen, director of the Macro Research Center affiliated to the China Minsheng Bank Research Institute:
The capital market performance directly impacts residents' property income. Since September 2024, policy efforts to boost the capital market and stabilize stocks and real estate reflect the central authorities' prioritization. The special action plan builds on these strategies, promising healthier market development and improved consumption capacity.
Liu Shijin, former deputy director of the Development Research Center of the State Council:
Urban and rural pensions should be raised from 220 yuan ($30.41) per month to 400 yuan per month in one to two years, 600 yuan in three years, and 1,000 yuan in five years. The consumption potential exceeding 1 trillion yuan is expected to be unlocked, driving nearly 1 percentage point of annual GDP growth.
A salesman shows how to use a car's central control system to a potential buyer at a 4S store in Hohhot, Inner Mongolia autonomous region, on March 5. DING GENHOU/FOR CHINA DAILY
The plan aims to alleviate rigid expenditure pressure to release consumption willingness
The special action plan emphasizes the protection of flexible employees, rural migrant workers, and workers in new forms of employments, focusing on securing their rights in childbirth, childcare, education, healthcare, and elderly care as part of its consumption capacity support measures.
Key measures:
- Expand educational resources in population-inflow cities.
- Promote the abolition of the household registration restrictions for flexible employment workers to participate in basic old-age and medical insurance at the place of employment, and expand the trial of occupational injury protection.
-Ensure the basic livelihood of key groups and strengthen assistance for low-income people.
Lu Ming, distinguished professor at Shanghai Jiao Tong University's Antai College of Economics and Management:
Populous cities face enormous demands for public services. Equalizing education and healthcare access for migrants will enhance the public well-being, ensure sustainable investment, and drive growth.
Establishing a unified national pension insurance system is urgent to realize barrier-free transfer and continuity of pension insurance relationship is an urgent need to protect the rights and interests of the migrating population and promote the rational flow of the labor force. This will not only help eliminate the worries of the migrating population's cross-regional employment but also improve the operational efficiency of the pension insurance system and promote the modernization of the social security system.
A staff member of an elderly care service center guides a senior citizen on using smart devices in Dongcheng district in Beijing, capital of China, Oct 31, 2024. [Photo/Xinhua]
The plan aims to improve the quality of service consumption
The special action plan introduces an action to improve the service consumption quality, covering:
- Optimizing elderly care and childcare services.
- Promoting daily-life services, cultural, sports and tourism services, ice-and-snow related consumption.
- Expanding service industry openness.
Wang Chengfang, president of Anhui provincial domestic service industry promotion association:
The plan encourages the development of community-embedded care and employer-sponsored childcare-integrated services. These will bring real benefits for the elderly and children, and enterprises will also usher in policy support and increase cooperation opportunities with government departments and communities.
Moreover, Community-embedded elderly care allows domestic practitioners to expand their domestic services through service modes such as medical escort, daily care, and social interaction. It releases the demand of the silver-haired consumer market. At present, there is a large demand for market-oriented childcare, and community childcare can not only facilitate parents to send and pick up their children to and from schools but also enable community mothers to achieve employment at their doorstep.
Lu Ming, distinguished professor at Shanghai Jiao Tong University's Antai College of Economics and Management:
People's pursuit of spiritual civilization is more reflected in the service industry, as evidenced by popular cultural consumption such as concerts and music festivals in recent years. At the same time, because of the immediacy of service consumption, it has a more sustained and stable pulling role in boosting consumption.
Pan Yuanyuan, an associate researcher at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences:
Steadily expanding the opening-up of the service industry is conducive to meeting the differentiated needs of all levels in China. In the future, there needs to be more detailed rules to cooperate with the encouragement catalog. For example, "Internet + medical" involves patient data management, follow-up data storage, data flow and other issues that need to be further clarified.
Potential homebuyers look at a property model in Taiyuan, Shanxi province. WEI LIANG/CHINA NEWS SERVICE
The plan aims to better meet housing consumption needs and extend the automotive consumption chain
The plan proposes to carry out big-ticket consumption renewal and upgrading actions, including:
- Increasing support for consumer product trade-in program.
- Better meeting housing consumer demand.
- Extending the auto consumption chain.
Wu Jing, director of the Henglong Center for Real Estate, Tsinghua University:
This marks the first time that a State Council document on boosting consumption has specifically outlined concrete measures to support housing consumption. It highlights the mutually reinforcing relationship between fully unleashing the potential of housing consumption and boosting overall household consumption, representing an extension and breakthrough in the approach to stimulating consumption.
Li Yujia, chief researcher at the Guangdong Planning Institute's residential policy research center:
Housing consumption has a leading and driving role in the consumption of the whole society, which can drive the consumption of old consumer goods for new, household appliances and furniture decoration. In the special action to boost consumption, housing consumption is the most important part.
Cui Dongshu, secretary-general of the China Passenger Car Association:
The policy will activate the new momentum of automobile consumption from three aspects: promoting market expansion, breaking down trading barriers, and building a digital regulatory system. The policy not only revitalizes the stock of automobile assets, but also creates incremental service demand, which is expected to promote the transformation of the automobile industry from manufacturing and sales to ecological services and promote the expansion and quality of the trillion yuan-level automobile consumer market.
A cashier counts RMB notes in a bank in Haian, Jiangsu province. [Photo/Sipa]
The plan eyes on fiscal-financial synergy and more incremental policies are on the horizon
The plan put forward a series of fiscal and financial support policies and called for strengthening the synergy of pro-consumption policies. From the perspective of policy deployment, more incremental policies to promote consumption are already on the way.
Fiscal measures include:
-Increasing ultra-long special treasury bonds for trade-in programs from 150 billion yuan to 300 billion yuan.
-Expanding central budgetary investment in education, healthcare, and elderly care.
-Introducing two new loan interest discount policies for consumers and service providers.
Financial measures:
- Encourage financial institutions to increase the deployment of personal consumption loans.
- Develop new structural monetary tools.
Zhang Bin, deputy director of the Chinese Academy of Social Sciences' Institute of World Economics and Politics:
The two policies of loan interest discounts for individual consumers and service providers have a leverage effect to boost consumption from both ends of supply and demand. The former drives demand for end products, while the latter will enhance the supply of public services.
Tian Lihui, head of the Institute of Finance and Development at Nankai University:
In product design for the plan to encourage financial institutions to increase the deployment of personal consumption loans, the establishment of a hierarchical credit system can be considered. For example, pilot "inbound consumer loans" for foreign tourists. In terms of process innovation, credit card virtualization can be explored, and payment can be completed by directly binding consumption scenarios through digital wallets.
