China’s new action plan to boost domestic consumption

Although summer events like the Olympics and Qixi Festival have seen many Chinese consumers spending again, flagging consumer demand is still an economic headache

On Saturday, 3 August, the State Council,?China’s highest administrative governing body, issued a wide range of suggested consumption-boosting steps to all levels of government. The?steps?(available in Chinese?here)?aim?to address China’s ongoing struggle with poor consumer demand, which is proving to be a drag on GDP growth.

Some of the key consumption-boosting measures included:

Catering:?The government aims to boost the catering sector through food culture (e.g., food festivals, unearthing?and developing local foods, tying tourist locations such as villages to signature dishes)?and encouraging international catering brands to establish operations in China.

Accommodation:?The tourism sector has been doing well in recent months, and the government hopes to build on this success by better integrating accommodation with tourist sites, improving the foreign-related services provided by hotels (a key complaint for some foreign visitors to China, as we wrote earlier this year) and revitalising idle rural houses to be used as rural hotels and homestay inns.

Tourism & Entertainment:

• Encouraging the development of new leisure tourism areas including cruise ships, yachting, and outdoor sports.
• Strengthening regional culture and increasing the supply of cultural performances and films.
• Improving the quality of online literature, online performances, online games, radio and television, and online audiovisual content.
• Accelerating the development of ultra-high-definition television and encouraging the development of new formats such as?immersive experiences,?role-playing games, digital art, and online performances.

New Types of Consumption:?Companies will be encouraged to cultivate unmanned retail stores and self-pickup lockers. The government will also offer support for the development of esports and livestreaming e-commerce (the latter is already worth trillions of RMB).

One of the ways the above goals will be achieved is by enhancing financing support for eligible small and micro enterprises in the service industry. The government has also proposed implementing additional personal income tax deductions to offset the cost of caring for infants and children under three, as well as expenses related to education and support for the elderly to boost the so-called ‘silver economy’.

These proposed measures came just days after the government?announced?a $42 billion stimulus package aimed at renewing large-scale equipment and replacing outdated consumer goods with new ones.