China issues new plan to aid consumption by focusing on services
The effort builds on Beijing’s attempts in recent months to overcome an imbalance afflicting the world’s second-biggest economy between industrial production and consumer spending
[BEIJING] China announced wide-ranging measures to stimulate domestic demand by promoting the consumption of services such as sports and entertainment, the latest attempt to help an economy grappling with slower growth.
The plan, issued on Tuesday (Sep 16) by the Ministry of Commerce along with several other departments, does not introduce more funding or subsidies for the services sector. But the 19 measures it outlines indicate the government will use its budget to develop the necessary infrastructure and guide banks to lend more to services providers along with consumers.
The effort builds on Beijing’s attempts in recent months to overcome an imbalance afflicting the world’s second-biggest economy between industrial production and consumer spending.
As part of the new initiative, China will extend the operating hours of museums and tourist sites, host more sporting events, and allow more companies to enter such industries as high-end medical care, according to an action plan published by the state broadcaster CCTV. It will also expand visa-free access to more countries, adding to similar rules already introduced with dozens of nations.
China’s economy slowed sharply for a second straight month in August in a sign of weakening domestic demand. Officials have struggled to pivot towards consumption as the labour market remains weak and the property market tumbles.
Services consumption has meanwhile emerged as a key area of focus for officials.
SEE ALSO
While the government has been offering subsidies for consumer goods, the services industry holds out the potential of unlocking additional demand, especially in areas such as tourism and entertainment that do not fully meet consumer needs.
In its latest quarterly monetary policy report in August, China’s central bank said the experience of other countries shows that as incomes rise, consumer spending will gradually shift from being dominated by the consumption of goods to services.
In 2024, services consumption accounted for just over 46 per cent of China’s overall household spending, it said. “There is still considerable room for growth.” BLOOMBERG
Share with us your feedback on BT's products and services
