In the first half of the year, my country's total retail sales of consumer goods increased by 3.7% year-on-year.
CNBC | Evelyn Cheng
SHANGHAI – China on Thursday announced its most targeted measures yet to stimulate consumption, which has been sluggish since the Covid-19 pandemic.
The authorities announced that they would allocate 300 billion yuan ($41.5 billion) of ultra-long-term special government bonds to expand existing trade-in and equipment upgrade policies. The document was jointly issued by the National Development and Reform Commission, China's economic planning agency, and the Ministry of Finance.
Zong Liang, chief researcher at the Bank of China, said in a phone interview Thursday that “such specific measures have never been taken” against consumption, according to a CNBC translation of the speech into Chinese.
He noted how the new policy would link the ultra-long-term bond program announced by Beijing in March to consumption.
“This is a very important measure to implement the Third Plenary Session of the Central Committee of the Communist Party of China,” Zong said, referring to last week's high-level meeting of Chinese leaders, which is held only twice every decade and usually discusses economic policy. Set the tone.
The most recent Third Plenary Session of the Central Committee of the Communist Party of China released several major guidance documents over the weekend, reaffirming Beijing's long-term interest in supporting advanced technologies. The focus of the official communiqué is “deepening reforms.” The report also stated that China would work hard to achieve its full-year national goals, but did not show major policy changes, disappointing many analysts.
Policymakers began taking action last week. Among other changes, the People's Bank of China unexpectedly cut interest rates on Monday and lowered its medium-term lending rate on Thursday.
The National Development and Reform Commission announced an expansion of consumption policies on Thursday.
“This move is an action that kills three birds with one stone: stimulating consumption, absorbing industrial output, and (consolidating) economic growth to achieve the promised 5% target,” JLL Greater China said.
policy at least Subsidy doubled The purchase prices of new energy vehicles and traditional fuel vehicles are 20,000 yuan and 15,000 yuan respectively.
The measures subsidize a range of equipment upgrades, from agricultural equipment to apartment elevators. Officials noted on Thursday that about 800,000 elevators in China are more than 15 years old, including 170,000 elevators that are more than 20 years old.
The policy also provides specific subsidies for home decoration and consumer purchases of home appliances such as refrigerators, washing machines, televisions, computers, and air conditioners. The document states that each consumer can receive a subsidy of up to 2,000 yuan for each product purchased in each category.
When arranging about 300 billion yuan of ultra-long-term bonds used by local governments for subsidies, the policy stated that the central government would recover unused funds by the end of 2024.
“This means they emphasize that money must be spent,” Zong said. He pointed out that the 300 billion yuan designation also reflects “a new way of thinking” that can have a large-scale impact.
Retail sales sluggish
The measures come as Chinese consumers have been reluctant to spend, partly due to uncertainty about future income and a real estate downturn.
China's retail sales annual growth slowed by 2% in June, and Zong Qinghou said it was “not ideal.”
Concerns about sluggish consumer spending in China have gained traction recently in a country where public discussion is tightly controlled.
Ctrip co-founder Liang Jianzhang reportedly called on Beijing this month to issue consumer vouchers “Eastern Reading” Newsletter It quoted Liang's post on the Chinese social media platform WeChat. The publication noted that Li Yang, director of the National Institute of Finance and Development (NFID), highlighted the decline in Chinese consumption in late May.
Total retail sales of consumer goods increased by 3.7% in the first half of the year, a growth rate lower than the same period last year An increase of 8.2% compared with the same period last year.
This means “there is considerable pressure to stimulate consumption,” Liu Xiaoguang, a professor at the Institute of Development and Strategy at Renmin University of China, said in a speech to reporters on Thursday, according to a copy seen by CNBC. That's according to CNBC's Chinese translation.
Liu said the real estate market has not yet seen a clear turning point and will take some time to stabilize.
But he said that with China's recently announced “deepening reform” plan, the economy could grow by 5.3% this year, compared with 5.1% without such measures.