China’s cabinet pledged to boost domestic consumption this year while vowing to stabilize foreign capital crucial for job creation.
In a weekly meeting chaired by Premier Li Qiang, the State Council said Monday that it will work to increase residents’ incomes, promote sustainable income growth and expand property-related income channels, all of which are aimed at stimulating domestic consumption.
The government didn’t provide specific details on how it plans to raise incomes, but analysts expect that the central government will likely propose enhanced pension and healthcare coverage at the coming annual legislative meeting in March. Next month’s meeting is also expected to unveil China’s economic growth target along with other supporting policies.
As the trade dispute with the U.S. intensifies, Beijing faces mounting pressure to reduce its heavy reliance on exports while bolstering domestic spending, a challenge compounded by weak consumer demand since the end of the Covid-19 pandemic.
In Monday’s meeting, the State Council said the government will intensify support for trade-in programs this year while boosting spending in the cultural, sports and inbound-tourism sectors.
According to data released Monday by the National Development and Reform Commission, the trade-in initiatives launched so far have spurred sales of automobiles, home appliances, furniture and various digital products.
During the eight-day Lunar New Year holiday, these programs generated more than 31 billion yuan in revenue, equivalent to $4.24 billion, with home-appliance and mobile-phone sales surging 166% and 182%, respectively, compared with the previous year.
While these trade-in programs have temporarily lifted spending, economists warn that their impact may gradually fade as the year progresses.
Meanwhile, China’s cabinet reaffirmed its commitment to attracting more foreign investment, a key element in creating jobs, stabilizing exports and upgrading industries.
The government plans to bolster the reinvestment of foreign capital in China, encourage foreign investors to undertake equity investments and broaden the range of industries in which foreign investment is welcomed.
Amid slowing economic growth and rising geopolitical tensions, China’s foreign direct investment fell by 27.1% in 2024, following an 8.0% decline in 2023.
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