China’s government has launched a comprehensive strategy to stimulate consumer spending, a move aimed at addressing the sluggish domestic demand that has been hindering economic growth. The State Council outlined 20 key measures in a statement posted on the central government’s website, emphasizing the expansion of basic consumption in sectors such as catering, home services, and elder care.
This initiative comes after the ruling Communist Party pledged to prioritize boosting consumption at a twice-a-decade plenum on long-term reforms in July. Economic growth had unexpectedly slowed to the worst pace in five quarters, according to data released in July, with weak consumer spending contributing significantly to this downturn. This slowdown prompted calls for government support to help Beijing achieve its annual growth target of about 5% for 2024.
The new framework includes enhanced financing for small and micro enterprises in the service sector and additional tax deductions for childcare, education, and elderly support expenses. Further bolstering this strategy, the State Council released a five-year urbanization plan on Wednesday, easing restrictions on household registrations in major cities and increasing housing support for new urban residents.
The State Council’s five-year action plan for urbanisation, released on Wednesday, aims to relax household registration restrictions in major cities and increase housing support for new urban residents. This plan is part of broader efforts to accelerate urbanization and boost domestic demand. The action plan targets increasing the urbanization rate of the permanent population to nearly 70% within five years to better support high-quality economic and social development.
Major measures include lifting household registration restrictions in cities with permanent urban populations of fewer than 3 million and comprehensively relaxing these requirements in cities with populations between 3 million and 5 million. The plan also includes support measures for new urban residents in areas such as education and housing, increasing central fiscal support for affordable rental housing, and upgrading urban infrastructure.
Experts have highlighted the significance of this action plan, noting that accelerating urbanisation, expanding domestic demand, and improving livelihoods are crucial for economic growth. Boosting domestic demand is now a top priority as China seeks to stimulate economic growth. On Tuesday, the State Council called for significant breakthroughs in expanding domestic demand, emerging industries, and high-level opening-up.
