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China’s government has announced ambitious plans to “vigorously boost consumption” by putting up pay and reducing financial burdens, in its latest attempt to increase consumer confidence and lift its struggling economy.
The plans, announced by the ruling Chinese Communist party’s (CCP) central committee and state council on Sunday, include aims to “promote reasonable wage growth” and to improve the mechanisms for adjusting the minimum wage.
It also proposed bringing in subsidies for childcare (a financial burden cited by young adults as discouraging them from having children), unlocking earnings potential for homeowners, promoting “emerging” markets such as AI-powered products and encouraging snow and ice tourism.
“By connecting consumer spending to broader social goals like elderly care improvement, childcare support and work-life balance, the plan embeds consumption growth within China’s wider development objectives, signalling that consumption is being positioned not just as an economic target but as a means to enhance quality of life,” said a report in the official state media outlet, Xinhua.
Fu Linghui, a spokesperson for the national bureau of statistics, told reporters on Monday that the economy was moving in the right direction but domestic and international challenges remained.
“The external environment has become more complex and grim, domestic effective demand is insufficient, some companies are facing difficulties in production and operation, and the foundation for the continuous recovery of the economy is still unstable,” Fu said.
The announcement came several days after the end of China’s Two Sessions political meeting, in which the CCP had set an expected 5% growth target for the economy. The announcement came after data revealed consumer prices had dropped into deflation last month for the first time in a year.
The fresh measures lifted many Asia-Pacific stock markets on Monday, and stocks in South Korea, Hong Kong and Australia closed higher. Mainland Chinese investors, however, were less enthusiastic, and the blue-chip CSI 300 closed 0.2% down.
The plan came amid mixed domestic economic data from Beijing, as reports showed retail spending was up compared with last year, but unemployment had hit its highest level in two years and house prices had fallen in almost all medium and large cities.
“In the first two months, with the sustained effects of macro policies, the national economy maintained the new and positive development,” the national bureau of statistics said, but it added that domestic effective demand was weak.
“The foundation for sustained economic recovery and growth is not strong enough,” it said.
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China’s government said the economy hit its growth target of 5% in 2024, but it was still the country’s slowest rate since 1990, bar the pandemic. The economy has been dragged down by a property market crisis, lingering low spending from the pandemic and record rates of youth unemployment in recent years.
In November the government announced 10tn yuan (£1.1tn) in debt support for local governments, but has largely shied away from the big stimulus measures that analysts say are needed.
The country is facing a protracted trade war with the US, as Donald Trump flags further expanding tariffs on Chinese exports, and potentially putting pressure on other countries to place their own levies.
“The risk to the economy is the damage from higher US tariffs on China’s exports which will likely show up in the trade data over the next few months,” Zhiwei Zhang, the president and chief economist at Pinpoint Asset Management, told the news agency AFP.
