China announces plan to boost domestic consumption

China announced a “Special Action Plan to Boost Consumption” on Sunday in a bid to prop up domestic consumption in the world’s second largest economy.

The General Office of the Central Committee, an office directly under China’s ruling party, said the plan was to vigorously boost consumption, expand domestic demand, and “enhance consumption capacity by increasing income and reducing burdens,” according to a Google translation of the report.

The wide-ranging release also outlined other steps, such as taking “multiple measures” to stabilize the stock market and developing more bond products suitable for individual investors.

This comes a week after China’s Premier Li Qiang delivered an annual report on government work that named boosting consumption as the top task for the year ahead.

Back then, Chinese policymakers had increasingly acknowledged the need to counter deflationary pressure at home.

China is currently facing a sluggish consumer landscape, with the most recent consumer price index in February registering its steepest fall in over a year and producer price index in contractionary territory since October 2022.

The plan announced on Sunday also called for support to promote inbound and domestic tourism, with support planned to be given to ice and snow regions to help them develop into globally recognized winter tourism destinations. Unilateral visa-free arrangements will be expanded and regional entry policies will be optimized.

China must focus more on domestic demand given the possibility of “new shocks” to overseas demand, Shen Danyang, head of the drafting group of the Government Work Report and director of the State Council Research Office, told reporters on March 11 in Mandarin, according to a translation by CNBC.

Chinese leaders pledged at an annual parliamentary meeting in January an additional 300 billion yuan (41.45 billion) of ultra-long special treasury bonds for consumers’ subsidy support.