BEIJING – On Monday, Chinese officials detailed a series of measures aimed at reviving domestic spending amidst the challenges posed by a tariff conflict initiated by U.S. President Donald Trump. This trade tension threatens to restrain China’s exports.
The People’s Bank of China, through its representative Che Shiyi, revealed plans to explore new financial instruments focused on enhancing low-cost lending for critical areas of consumption that could drive economic growth.
In terms of spurring expenditure, the government has already allocated an initial sum of 81 billion yuan ($11.2 billion) in January to support local governments with a rebate initiative. This program, unveiled by Li Chunlin of the National Development and Reform Commission, targets boosting sales of vehicles and appliances.
These announcements coincided with a recent policy blueprint, jointly issued by the government and the ruling Communist Party, highlighting various strategies to invigorate consumer spending. The proposed steps underscore the government’s commitment to energize the sluggish economy.
Lynn Song, ING bank’s chief Greater China economist, commented that while specifics on spending increase are limited, the detailed plan signals a more assertive approach to addressing China’s consumption challenges this year.
Fresh government data released on Monday indicated improvements in certain sectors, despite ongoing weaknesses in the housing market. Retail sales during January and February rose by 4% compared to the previous year, surpassing expectations, while industrial production grew by 5.9%, according to the National Bureau of Statistics.
These positive data points helped to uplift Asian stock markets. However, a bureau spokesperson highlighted persistent challenges, both domestically and internationally, noting the economic complexities intensified by Trump’s 20% tariff on Chinese goods. Trump has reiterated plans for more tariffs in early April.
“The economic environment remains intricate, with insufficient domestic demand, operational hurdles facing some businesses, and an unstable foundation for economic recovery,” said Fu Linghui at a news briefing. He added, however, that China’s foreign trade remains resilient.
Despite these challenges, enhancements in China’s industrial systems and growing innovation capabilities provide a solid base for the steady advancement of foreign trade, according to Fu.
The prolonged real estate downturn continues to dampen consumer confidence and expenditure, with real estate investment dropping 9.8% in the opening months of the year. Nevertheless, there is a silver lining as the decline in real estate prices has begun to slow, though not yet reaching stabilization. Both new and existing home prices experienced reduced rate declines in January and February compared to the previous year.
According to ING bank, while real estate prices may cease falling within the year, rapid recovery isn’t anticipated.
“The data from February suggests continued governmental policy support is essential,” Song stated.
Sunday’s comprehensive plan includes various initiatives, from promoting development in artificial intelligence technologies such as self-driving vehicles and smart wearables to enhancing winter tourism in snowy regions, as reported by the official Xinhua News Agency.
Additionally, the plan promotes enhancing consumer purchasing power through initiatives like lowering the retirement age, broadening benefits for older citizens, and improving health coverage for rural populations.
Earlier this month, it was announced that the rebate program, now into its second year, would see its budget doubled to 300 billion yuan by 2025. It incentivizes citizens to exchange old appliances or vehicles for newer models.
