China issues 11-point policy package to boost consumer spending amid slowing retail sales
Beijing asks financial institutions to help increase domestic demand by making it easier to access credit and shifting focus to services
China has announced a new policy package to boost household spending by tightening coordination between commerce and financial regulators, expanding access to credit and promoting new forms of consumption.
Analysts said the support could intensify in the new year, with the focus likely shifting towards service-sector spending rather than big-ticket goods.
It also encourages eligible local governments to use digital yuan “red packets” to improve the effectiveness of consumption incentives.
“Local commerce authorities are encouraged to make full use of existing funding channels, actively roll out consumption-boosting initiatives, and work in tandem with financial support measures to better unlock consumer demand,” the notice issued on Sunday said.
Policymakers are treating economic rebalancing as a system-wide project, “with boosting consumption targets embedded into multiple government agencies’ KPIs [key performance indicators],” said Xu Tianchen, senior China economist at the Economist Intelligence Unit.
“The year-end roll-out signals policymakers’ intent to get ahead and prepare in advance, allowing measures to take effect from the start of the new year rather than waiting for March’s ‘two sessions.’”
The financial support outlined in the latest policy package is ample, but credit demand remains weak, Xu said. Consumer stimulus is likely to stay strong next year, with the emphasis shifting towards services such as skills training, maternal and childcare services, healthcare and elderly care amid a rapidly ageing society, he added.