Chinese authorities have announced 20 measures to boost domestic consumption, including support for expanding real estate and auto sales, to ensure a steady economic recovery and meet annual economic development goals. The Chinese government also held an executive meeting on counter-cyclical adjustment and macro policies, and called for efforts to stimulate private investment and accelerate the growth of strategic emerging industries. The measures by the National Development and Reform Commission (NDRC) followed another high-level meeting that stressed the need to stabilize growth by lifting domestic demand and boosting the private economy.
An important focus of the 20 measures is stabilizing consumption of big-ticket items such as houses and cars. The NDRC reiterated support for those buying their first homes and those seeking to upgrade their living standards. Specifically, the NDRC vowed to improve the basic mechanisms and support policies for housing security, expand the supply of affordable rental housing, and focus on addressing the housing problems of new urban residents, young people and other groups with housing difficulties. Other Chinese authorities and local governments have recently issued various measures to boost the real estate market, which is a major driver of domestic consumption. Ni Hong, Minister of Housing and Urban-rural Development, called for lower down payment requirements and mortgage rates for first-time homebuyers, tax breaks for upgrading, and treating buyers who have paid off prior mortgages as first-time purchasers.
Another key driver of domestic consumption is auto sales, which account for about 10% of total consumption. The NDRC said all regions are barred from imposing new restrictive measures on car purchases, and places that already have restrictions in place should optimize them according to their local conditions. Restrictions on sales of second-hand cars should be abolished. More policy support will also go to boosting sales of new-energy vehicles (NEVs). Auto sales have become a highlight of the consumption recovery in China. In the first half of 2023, they increased by 9.8% year-on-year to about 13.24 million units. Most notably, sales of NEVs in the first half of the year surged 44.1% year-on-year to 37.47 million units.
Apart from home and car sales, the NDRC measures also covered a wide range of areas, including expanding services and rural consumption, promoting new models of consumption, and improving consumption infrastructure. The NDRC also called for full implementation of the paid leave, off-peak leave, and flexible work and rest, in order to boost cultural and tourism consumption. “Promoting consumption is the key to the current recovery and expansion of demand,” Li Chunlin, Vice Chairman of the NDRC, said. Consumers' willingness to spend improved in the first half of the year, with an 8.2% year-on-year growth rate in total retail sales, which hit CNY22.75 trillion. “What I want to express is that the Chinese economy has strong resilience and vitality,” Li said, as reported by the Global Times.
