Kyodo News:

From a macroeconomic point of view, General Secretary Xi Jinping places great importance on expanding domestic demand. Which policies are particularly critical in achieving this goal? For instance, purchase subsidies for new-energy vehicles have been terminated. From what aspects will the MOF use fiscal policy resources to drive the expansion of consumption? Thank you.

Xu Hongcai:

You raised a very important question because consumption is a key engine of economic growth and the ultimate aim of people's work and lives. The report to the 20th CPC National Congress pointed out that the fundamental role of consumption in stimulating economic growth should be leveraged. Clear requirements were put forth at the Central Economic Work Conference for prioritizing consumption recovery and expansion. A few years back, the contribution of final consumption to China's economic growth was more than 60%. However, the consumption growth rate has declined due to factors such as the epidemic in recent years. This is also an important reason for slower economic growth.

Promoting consumption is crucial for driving economic growth and ensuring sustained and healthy economic development. Restoring consumption as soon as possible is the main driving force of economic growth. The key to vigorously improving consumer confidence and unleashing consumption potential is to address acute issues such as limited spending power, inconvenient consumption, and reluctance to spend. Financial departments will fully implement the strategy of expanding domestic demand and actively improve policies and measures centered on better exploiting the fundamental role of consumption. We will start from the following three aspects to stimulate consumption potential to further support and promote the recovery and upgrading of the consumer market.

First, we will strive to increase personal income through various channels to ensure ordinary people have more money to spend. We should do everything possible to increase employment, enabling people to create income through hard work. We will expand social security, transfer payments, and other adjustments to improve the consumption capacity of medium- and low-income residents while improving tax and fee preferential policies to stimulate social consumption potential.

Second, we will support efforts to increase the supply of readily marketable products to enhance people's willingness to consume. By adopting proactive fiscal policies and advancing supply-side structural reform, we will continue to improve domestic supply quality to unleash market demand's potential. We will encourage localities with the right conditions to support, through current financial channels, the replacement of old home appliances as well as the purchase of green and smart home appliances in rural areas. We will continue to waive vehicle purchase tax for new-energy vehicles purchased in 2023 and lower import tariffs for some quality consumer goods. We will speed up establishing a housing system with multiple types of suppliers, multiple channels for housing support, and encouragement for renting and buying. We will also support people in buying their first homes or improving their housing situation. With all these efforts, we will actively expand consumer spending.

Third, we will ensure smooth sales channels and logistics services to make people's consumption convenient. We will facilitate action to develop county-level commerce to upgrade and expand consumption at the county level. Support will be given to develop the supply chain system for agricultural products and expand the consumer market for agricultural products. We will support the construction of a batch of national integrated freight transport hubs to reduce costs and improve efficiency in logistics. Thank you.