Entering ChinaOn March 17, the State Council Information Office held two press conferences on the same day.
In the morning, the National Bureau of Statistics introduced the operation of the national economy from January to February 2025.
In the afternoon, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Human Resources and Social Security, the Ministry of Commerce, the People’s Bank of China, and the State Administration of Market Regulation jointly interpreted the “Special Action Plan for Boosting Consumption”.
After the release of economic data in the first two months, six ministries and commissions jointly issued a voice to boost consumption. This arrangement in itself sends a strong signal that consumption is a top priority in 2025.
General Secretary Xi Jinping attaches great importance to promoting consumption, emphasizing that the focus of economic policies should be more focused on benefiting people’s livelihood and promoting consumption. The Central Economic Work Conference and the Government Work Report both listed “vigorously boosting consumption, improving investment efficiency, and expanding domestic demand in all aspects” as the top of all key tasks this year.
Careful people will find that the “Special Action Plan for Boosting Consumption” was issued in the name of the Central Committee and the State Council, which also reflects the great importance that the Party Central Committee and the State Council attach to the “primary task”.
The South China Morning Post quoted experts as saying that the plan is the most comprehensive guidance for boosting consumption since China’s reform and opening up. Lianhe Zaobao said that “the world’s second-largest economy is trying to use domestic demand as the main engine and stabilizer of economic growth”.
The troika that drives the economy, why does consumption become the locomotive?
Consumption and investment are two important components of China’s domestic demand. Breaking the routine that “consumption is a slow variable” and emphasizing the mutual promotion of consumption and investment expansion is the new way of thinking of the CPC Central Committee on macroeconomic regulation and control.
The author believes that this new idea has two profound connotations.
Consumption is related to people’s livelihood
The 30 specific measures of the Plan cover all aspects of people’s livelihood issues such as employment, pension, medical care, and education, and have a prominent orientation of “people’s livelihood is the greatest”.
Vigorously boosting consumption is a systematic project, and there are a large number of supporting policies on the way.
Li Chunlin, deputy director of the National Development and Reform Commission, revealed at the press conference that the policy synergy of more than 30 departments was brought together in the process of the introduction of the plan. In addition to the six departments that attended the press conference on the same day, the Ministry of Civil Affairs, the Ministry of Culture and Tourism, the China Securities Regulatory Commission, the Ministry of Education, the National Health Commission, the Ministry of Agriculture and Rural Affairs and other departments are also actively planning corresponding policies.
The author roughly combed through it, and there was a lot of information released at the press conference on the 17th:
❖
For childcare subsidies, the National Health Commission is already drafting a specific operating plan;
❖
Gradually implement free pre-school education to reduce the pressure on students’ families to spend on education;
❖
strengthen implementation supervision and implement a paid annual leave system;
❖
Encourage flexible off-peak vacations, and encourage places with conditions to set up spring and autumn vacations for primary and secondary schools;
❖
expand the scope of use of housing provident fund;
❖
Implement actions to improve the energy and income of low-income people in rural areas;
In 2025, the central government will allocate 66.74 billion yuan in employment subsidies, 29.65 billion yuan in medical assistance subsidies, and 80.55 billion yuan in subsidies for basic public health services to strengthen medical care, education, pension and employment security, and support the improvement of residents’ spending power.
This package of policies is actually to open up the promotion of consumption and benefit the people’s livelihood, so that the people have a “real feeling” of economic development, narrow the “temperature difference” between macroeconomic data and micro individual feelings, and make the people’s consumption more confident, more stable and more confident.
Consumption is related to the general trend of the economy
In 2024, exports have made a very important contribution to the achievement of the annual target of China’s economy. Among the troika, net exports contributed 30.3%, consumption contributed 44.5%, and investment contributed 25.2%.
Compared with last year, the external environment this year is more complex and severe. The first year of “Trump 2.0” has brought great uncertainty to the world economy.
From January to February this year, China’s total import and export of goods was 6,536.4 billion yuan, a year-on-year decrease of 1.2 percent, according to customs calculations, excluding incomparable factors, import and export increased by 1.7 percent.
Although this data shows the strong international competitiveness and foreign trade resilience of China’s products in the complex and severe international environment, compared with the growth rate of more than 8% in the first two months of 2024, it also shows that foreign trade is facing greater pressure.
Under these circumstances, in order to achieve 5% economic growth this year, it is necessary to make a strong contribution to the carriage of “consumption”.
“The market demand space is broad, and there is a foundation for the release of consumption investment potential.” Fu Linghui, spokesman of the National Bureau of Statistics, said that the market is the most scarce resource, China has a population of more than 1.4 billion, per capita GDP of more than 13,000 US dollars, the market potential is large, the space is wide, and there are huge development opportunities.
China’s policy of expanding domestic demand and stabilizing growth has achieved initial results. Statistics show that the total retail sales of consumer goods increased by 4.0% year-on-year from January to February this year. The Wall Street Journal said that “China’s economic data for the start of the year was surprisingly strong.”
At the press conference on the 17th, Li Chunlin, deputy director of the National Development and Reform Commission, had an impressive sentence: “Everyone gathers firewood and the flame is high, and all departments work together to promote the continuous release of policy dividends.”
Fu Jinling, director of the Department of Economic Construction of the Ministry of Finance, also revealed that the central government will arrange awards and subsidies to support China’s international consumption center cities and some key consumption cities.
In July 2021, the State Council approved five cities, Shanghai, Beijing, Guangzhou, Tianjin, and Chongqing, to take the lead in cultivating and building international consumption center cities. In addition, according to incomplete statistics, more than 20 cities across the country, including Shenzhen, have proposed to accelerate the construction of international consumption center cities.
In 2024, China will have seven trillion-dollar consumption cities in Shanghai, Chongqing, Beijing, Guangzhou, Shenzhen, Chengdu and Suzhou. It is believed that in the context of vigorously boosting consumption, these cities will usher in new opportunities and challenges in 2025.
