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E-mail Xinhua, March 7, 2025
BEIJING, March 7 (Xinhua) -- Vowing to make domestic demand "the main engine and anchor of economic growth," China's policymakers have sent fresh and firm signals on empowering the vast number of consumers to spend, countering skepticism about the country's shift toward a consumption-driven economy.
China will "place a stronger economic policy focus on improving living standards and boosting consumer spending," according to this year's government work report submitted Wednesday to the National People's Congress (NPC), the national legislature, for deliberation.
Boosting consumption is hardly a fresh concept in the Chinese policy toolbox, and consumer spending has played an increasingly vital role in China's economy. In 2024, final consumption contributed 44.5 percent to China's economic growth, surpassing investment and exports, and drove GDP up by 2.2 percentage points.
This year, however, the push has been particularly important as China's economy contends with rising trade protectionism and global headwinds, while the domestic shift from traditional growth drivers, such as real estate, to new and more sustainable ones poses new challenges.
"Expanding domestic demand through stimulating consumption can effectively counter external uncertainties, and it stabilizes short-term growth while aiding structural shifts over time," said Yang Decai, a national political advisor and economic professor at Nanjing University, during the annual meetings of China's top legislature and political advisory body, or the "two sessions."
To support this pivotal transition, the government work report unveiled stronger supportive measures, including issuing ultra-long special treasury bonds of 300 billion yuan (about 42 billion U.S. dollars) to back the consumer goods trade-in program, doubling the scale from last year.
The trade-in program, launched a year ago, has played a vital role in revitalizing consumer markets. In 2024, it led to sales exceeding 1.3 trillion yuan, including over 6.8 million vehicles, 56 million home appliances and 1.38 million e-bikes. More items have been added to the list of subsidized products this year.
"The trade-in scheme is more than just an economic policy," Minister of Commerce Wang Wentao told a press conference on the sidelines of the third session of the 14th NPC on Thursday, noting that it has fostered new development engines and improved the quality of life for millions of households.
Wang pointed out that the primary issue constraining goods consumption is the ability and willingness to spend, while the main challenge for services consumption is the lack of high-quality supply.
To tackle these weaknesses, the Chinese government, in addition to clinching cheaper deals for consumers, aims to lift consumer confidence by bolstering people's wellbeing, with a focus on creating jobs, raising incomes and easing their financial burdens.
More funds and resources will be used to serve the people and meet their needs, according to the government work report.
Targeting over 12 million new urban jobs this year, the government will provide stronger support for full and higher-quality employment, according to the report. It also pledged to raise the minimum basic old-age benefits for rural and non-working urban residents as well as the basic pension benefits for retirees.
"Raising farmers' pension payments may be the most effective way to boost consumption because it will significantly reduce the savings rate and boost consumption for half of China's population," said Lu Ting, chief China economist at Nomura, who expects more will be done in this regard in coming years.
Government spending on education will rise by 6.1 percent this year and that on social security and employment by 5.9 percent, with strong gains also expected in healthcare and housing, Finance Minister Lan Fo'an revealed at Thursday's press conference.
NEW CONSUMPTION SCENARIOS
Chinese policymakers have also tied consumption to lifestyle upgrades, not just spending volume, as the government work report highlighted the need to create new consumption scenarios to accelerate the growth of digital, green, smart, and other new types of consumption.
It promised to improve the leave system and ensure its implementation to unlock consumption potential in sectors like culture, tourism and sports, which are among the most powerful service consumption engines.
Meanwhile, new consumption trends -- from winter sports boom to silver-haired consumer spending upsurge -- are already stoking fresh growth.
The silver economy, which caters to China's aging population, could reach 30 trillion yuan by 2035 and create at least 100 million jobs by 2050, according to national political advisor Jin Li, vice president of Southern University of Science and Technology.
Sun Guangzhi, head of the provincial culture and tourism department of the ice and snow-rich Jilin Province, said the northeastern province sparked over 100 million yuan in direct spending by issuing consumption vouchers in the latest snow season.
"This well demonstrates the combined benefits of policy incentives and local resource strength," said Sun, a national lawmaker.
Advancements in technological innovation are set to open up new market frontiers, with breakthroughs like the artificial intelligence (AI) model DeepSeek, a hot topic during this year's "two sessions."
With consumer electronics and appliance makers racing to incorporate AI technologies into products, global market research firm International Data Corporation forecast that shipments in China's smart terminal market will rise 4 percent in 2025, and those of AI personal computers, AI tablets and AI smartphones could jump 20 percent year on year.
Globally, China's consumption stimuli will enhance the resilience of its domestic economic flow and offer demand for the global supply chain, according to Yang.
"From new energy to AI, the expansion of new consumption scenarios in China will unfold new opportunities for capacity collaboration and technological innovation for global industries," he said. Enditem
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