Policy focus on consumption to drive growth

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By Fan Feifei and Ouyang Shijia (China Daily) 08:49, April 21, 2025

China's pro-consumption initiatives — a top priority of the country's policy agenda for this year — are expected to shore up consumer confidence and unleash the potential of domestic demand to stimulate economic growth, while hedging the impact of the United States' tariff hikes, said officials, economists and executives.

They noted that China has demonstrated firm determination to further vitalize the consumer market and address prominent constraints on consumption by bolstering people's well-being amid rising trade protectionism and external uncertainties, with a particular focus on stabilizing jobs, increasing household income and alleviating financial burdens.

A comprehensive policy package to boost consumption will accelerate the country's shift toward a consumption-driven growth model from an export- and investment-led growth model, they said. The economists and executives also projected a robust recovery for China's consumer market this year, with concrete measures aimed at strengthening consumers' ability and willingness to spend gradually taking effect.

President Xi Jinping has emphasized efforts to expand domestic demand, as well as establish and improve a long-term mechanism for expanding residents' consumption, so that residents can consume with the help of stable income, dare to consume without worries, and are willing to consume due to the excellent consumption environment and strong sense of gain. Xi, who is also general secretary of the Communist Party of China Central Committee, made the remarks when attending the second group study session of the Political Bureau of the 20th CPC Central Committee in January 2023.

According to the Central Economic Work Conference held in December last year, the foremost priority for policymakers in 2025 is to vigorously boost consumption, improve investment efficiency and expand domestic demand on all fronts. This year's Government Work Report also listed boosting consumption as a top priority among major tasks for 2025.

China will make expanding domestic demand a long-term strategy, while solid measures should be taken to stabilize employment, boost incomes and create demand with high-quality supply, Premier Li Qiang said earlier this month when chairing a symposium on the economic situation.

The fifth China International Consumer Products Expo, which was held last week in Haikou, Hainan province, is a strong testimony to the vitality and resilience of the nation's consumer market. The event attracted more than 60,000 professional purchasers, a 10 percent increase from last year, with the value of intended deals reaching around 92 billion yuan ($12.6 billion).

To stimulate domestic demand and solve key challenges weighing on consumer sentiment, the general offices of the CPC Central Committee and the State Council, China's Cabinet, recently issued a special action plan for boosting consumption.

Li Chunlin, deputy head of the National Development and Reform Commission, said that unlike past policies that primarily targeted the supply side, the new plan places great emphasis on stepping up policy support on the demand side by raising people's income and reducing financial burdens.

The plan calls for promoting wage growth by strengthening employment support and raising minimum wage standards in a scientific and reasonable manner, and it includes stabilizing the stock market to expand property income channels, he said, adding that these measures will give consumers more stable expectations and greater confidence in their spending power.

He said that dedicated efforts have been outlined in the plan to integrate consumption growth with improving people's livelihoods, such as easing household burdens in areas like child care, education, healthcare and old-age insurance.

The country is drafting a child care subsidy plan and will expand financial assistance for basic medical insurance.

"China's efforts to boost domestic demand can offset the impact of US tariff hikes," said Sun Xuegong, director of the department of policy study and consultation at the Chinese Academy of Macroeconomic Research, an NDRC think tank, while emphasizing that the nation's economic fundamentals are sound, with a strong manufacturing sector and great market potential.

Sun highlighted the need for a comprehensive policy mix to spur consumption, including short-term moves such as issuing consumption coupons, as well as long-term spending on strengthening the social security network.

Pan Helin, a member of the Ministry of Industry and Information Technology's Expert Committee for Information and Communication Economy, said that expanding domestic demand by boosting consumption could effectively help buffer external headwinds and prop up economic vibrancy.

The consumer-centered stimulus measures will reduce China's reliance on exports and investment for growth and facilitate its transition to a more consumption-led economy in the face of an increasingly complicated international situation and sluggish global recovery, Pan said.

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