In an effort to boost flagging domestic consumption and offset economic losses from its trade war with Washington, China’s government has unveiled a lengthy list of initiatives worth over $1 trillion. The plan includes measures such as increased pensions, better medical benefits, and higher wages, which could bolster the economy by stimulating consumer spending.
However, local governments are struggling under enormous debts and plummeting revenues due to the collapse of state land sales. The government’s move comes as China seeks to rebalance its economy away from a reliance on a large trade surplus.
Chinese leaders have been searching for ways to address this issue amidst rising tariffs imposed by US President Donald Trump. The plan aims to reassure the public that investments are safe and stabilize the stock market, which has seen falling property prices and a housing market crash.
The “Special Action Plan to Boost Consumption” was jointly issued by the General Office of the cabinet and the Central Committee of the Communist Party, signaling Beijing’s commitment to addressing the lackluster domestic spending. The plan includes measures such as increasing subsidies to low-income households and paying overdue debts to businesses.
Despite the promising details of the plan, there is no new promise of money from the national government to help local governments pay for these initiatives. China’s local governments are expected to raise most of their revenue by issuing payments or increasing subsidies to “people in need.” The plan is set to be released on Monday along with economic data and senior officials will speak about the initiatives later that day.
Source: https://www.nytimes.com/2025/03/16/business/china-consumption.html