China has introduced new measures to enhance consumer spending, focusing on income growth and trade-in programs. This initiative follows recent legislative meetings prioritizing consumption as a key economic goal. Experts believe these efforts are essential for achieving the targeted 5 percent growth in 2025 and facilitate the country’s transition to a consumption-driven economy.

China has unveiled new policy measures aimed at boosting consumer spending, prioritizing income growth and expanding the consumer goods trade-in program. This initiative follows the recent two sessions, where boosting consumption was emphasized as a key objective for 2025. Experts suggest these steps are crucial for achieving the nation’s growth target of approximately 5 percent amidst challenging external conditions.

The special action plan, issued by the General Office of the Communist Party of China Central Committee and the State Council, seeks to address challenges affecting consumer confidence and purchasing power. The strategy emphasizes increasing income through employment support in key sectors and stabilizing the stock market to enhance property-related income.

Guo Chunli, vice-president of the Chinese Academy of Macroeconomic Research, noted that previous policy measures have already initiated a rebound in China’s stock markets and the real estate sector. He emphasized that “the upward trends have helped to stabilize asset prices, which is crucial for consumers to feel secure about their financial situation and be more willing to spend.”

Looking ahead, the housing markets in various cities are expected to stabilize, particularly in the second half of the year, as the adverse effects of the real estate sector on economic performance, including consumption, are likely to lessen. Citigroup’s report supports this forecast.

Furthermore, the government will enhance support for trade-in programs utilizing fiscal funds to enable local authorities to expand these initiatives. During the two sessions, it was announced that the allocation for long-term special treasury bonds for the trade-in program would increase to 300 billion yuan ($41.43 billion) in 2025, up from 150 billion yuan.

This trade-in incentive will cover a significant portion of select product purchases for items such as midrange smartphones, home appliances, and new energy vehicles. Predictions from China Merchants Securities indicate that trade-in sales could exceed 2.4 trillion yuan this year, contributing nearly 5 percentage points to the growth of retail sales of consumer goods.

The transition towards a consumption-led economy is vital for China, moving away from an investment-heavy model towards a more sustainable model. The shift towards consumption has been observed over the past decade, which has consistently augmented its contribution to GDP, according to Ole Gerdau, chief operating officer at Deutsche Bank China.

In summary, China’s recent policy measures aimed at enhancing consumer spending focus on increasing individual incomes and expanding trade-in programs. The strategic actions are critical for addressing consumer confidence issues and meeting the country’s growth target of approximately 5 percent for 2025. The expansion of trade-in initiatives and stabilization of key markets will support the transition towards a consumption-driven economy, which has been steadily growing in importance within China’s economic framework.

Original Source: asianews.network

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