China unveils action plan to boost consumer spending

BEIJING – China’s government on Aug 3 laid out its priorities to spur consumer spending as weak domestic demand continues to weigh on growth.

The State Council, China’s Cabinet, designated 20 key steps, including exploring the potential to expand basic consumption in areas such as catering, home services and eldercare, according to a statement posted on the central government’s website.

The authorities will also look to foster new types of spending, cultivate unmanned retail stores and self-pickup lockers, and support the development of electronic sports and live-streaming e-commerce.

The ruling Communist Party of China in July pledged to make boosting consumption a greater policy focus at a twice-a-decade plenum on long-term reforms.

The country’s economic growth unexpectedly slowed to the worst pace in five quarters in data released in July, as faltering consumer spending undermined a boom in exports. That triggered calls for policymakers to unleash government support to help Beijing hit its annual growth goal of about 5 per cent for 2024.

Under the framework announced on Aug 3, the government would enhance financing support to eligible small and micro enterprises in the services industry. It would also implement additional personal income tax deductions to offset the cost of caring for children under the age of three, as well as expenses on education and support for the elderly.

Beijing also plans to encourage the development of new leisure tourism areas, including cruise ships, yachting and “low-altitude flying”.

The authorities will step up credit support for key areas of services consumption and increase the supply of financial products that meet the developmental needs of new consumer formats such as the sharing economy, according to the statement. BLOOMBERG