China’s New Consumption Boost Plan Summarized
On Sunday, the Chinese government released the Special Action Plan for Boosting Consumption, outlining a series of measures aimed at stimulating domestic demand. The plan spans eight key areas, from income growth and consumption capacity to improving the consumer environment and optimizing regulations. Below is a summary of the eight pillars of the plan:
1. Promoting Income Growth for Urban and Rural Residents
The plan aims to increase disposable income for both urban and rural residents by:
Raising the minimum wage and stabilizing employment.
Expanding access to pension and healthcare benefits.
Encouraging long-term capital investment in markets.
Resolving delayed payments to SMEs to boost liquidity.
2. Supporting and Safeguarding Consumption Capacity
The plan promotes financial assistance and social benefits, adding certainty to consumers’ future welfare, so they don’t feel like they need to save for their safety net:
Expanding childcare subsidies and healthcare support.
Increasing pension benefits for retirees.
Providing financial aid and interest-free loans for students.
Strengthening unemployment benefits and social security.
3. Enhancing Service Consumption and Public Benefits
The plan promotes healthcare, education, tourism, and digital services by:
Supporting elderly care, childcare, and medical services.
Expanding sports, cultural events, and travel consumption.
Optimizing visa-free policies to attract foreign tourists.
Encouraging the development of international service hubs.
4. Upgrading and Renewing Large-Scale Consumption
The plan focuses on green and high-tech consumer goods, including:
Subsidies for smart home appliances, electric vehicles, and electronics.
Support for recycling and second-hand goods markets.
Stimulus for housing market recovery and renovations.
Growth of auto aftermarket services (rentals, modifications, RV tourism).
5. Enhancing Consumption Quality
China’s government continues to push local brand development by:
Encouraging cultural IP creation (animation, gaming, e-sports, and fashion).
Supporting domestic brands in global markets.
Promoting "Shopping in China" campaigns.
6. Improving the Consumer Environment
The plan seeks to enhance consumer protection and ease market entry by:
Enforcing paid leave policies to improve work-life balance.
Strengthening consumer rights protections and online pricing transparency.
Reducing unnecessary purchase restrictions (e.g. shifting auto regulations from purchase limits to usage policies).
Simplifying licensing for foreign service providers in healthcare, telecom, and education.
7. Optimizing and Removing Restrictive Measures
To further encourage consumption, China is:
Removing unnecessary local restrictions on business operations.
Simplifying permits for promotional events and retail expansion.
Reducing bureaucratic barriers for foreign businesses.
Transitioning from purchase restrictions to usage-based management (e.g. for automobiles).
8. Improving Support Policies
To drive spending, China is increasing credit availability and financial support through:
Expanding personal consumer loans and adjusting repayment terms.
Providing financial subsidies for consumer lending.
Encouraging businesses to offer flexible payment options.
Strengthening trade insurance and credit financing for businesses.
Anyone who has spent time in China is likely to have noticed how elaborate the packaging can be relative to similar products in Western countries. Goods are wrapped up as if for high tea in the depths of a Heilongjiang winter - one may have to make their way through four or five layers of intricate wrapping before reaching a tasty morsel buried deep inside. The perceived status, discovery or safety from fanciful packaging trumps any environmental concerns for most consumers.