Despite recent upticks in consumer spending driven by events like the Olympics and the Qixi Festival, China's economic landscape still grapples with weak consumer demand, which continues to impede GDP growth. In response, the State Council, China’s highest administrative authority, unveiled an extensive action plan on 3 August. This plan outlines a series of strategic measures designed to invigorate domestic consumption and address the ongoing economic challenges.
Key Components of the Consumption-Boosting Measures
Catering Sector Revitalisation: To rejuvenate the catering industry, the government plans to leverage China's rich food culture. Initiatives include hosting food festivals, promoting local culinary traditions, and connecting tourist destinations with regional dishes. Additionally, there will be efforts to attract international catering brands to establish a presence in China, aiming to diversify and enhance the dining experience for consumers.
Accommodation and Tourism Development: Building on recent successes in tourism, the strategy focuses on integrating accommodation more closely with tourist attractions. Improvements are planned for foreign-related services in hotels, addressing common concerns among international visitors. There is also a push to repurpose unused rural properties into accommodations such as rural hotels and homestay inns, enhancing the appeal of countryside tourism.
Enhancements in Tourism and Entertainment: The plan promotes the development of new leisure tourism options, including cruise ships, yachting, and outdoor sports. To enrich the cultural landscape, there will be an increase in the supply of regional cultural performances and films. The quality of digital content, including online literature, performances, games, and audiovisual media, is also set to improve. Additionally, the strategy aims to advance ultra-high-definition television and foster innovations like immersive experiences, role-playing games, and digital art.
Promotion of New Consumption Models: The government is encouraging the growth of unmanned retail stores and self-service pickup lockers. Support will also be provided for the expansion of esports and livestreaming e-commerce, which has already become a multi-trillion RMB industry.
Financial and Tax Support: To facilitate these objectives, the government plans to enhance financing for small and micro enterprises within the service sector. Furthermore, additional personal income tax deductions will be introduced to alleviate costs associated with childcare for infants and young children, education, and elderly care. These measures aim to stimulate the ‘silver economy’ and support families.
These proposals follow the recent announcement of a $42 billion stimulus package, which focuses on renewing large-scale equipment and replacing outdated consumer goods. Together, these initiatives represent a comprehensive approach to bolstering consumer demand and fostering economic growth across various sectors.
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