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China unveils policy incentives to boost consumption

Xinhua | July 31, 2023


China's top economic planner on Monday rolled out a slew of measures to boost consumption amid efforts to sustain economic recovery and promote high-quality development.

The country vowed to spur consumption of a wide range of items and services, including new energy vehicles (NEVs), home appliances, electronics, catering, cultural and tourism sectors, as well as that in rural areas. It also pledged to support rigid demand for housing and improved living, according to a notice released by the National Development and Reform Commission (NDRC).

Based on the principles of adhering to better combinations of an effective market and a competent government, optimizing supply and expanding demand, and quality upgrading and innovative development, the NDRC has introduced a set of 20 measures, said Li Chunlin, deputy head of the commission, at a press conference.

The measures aim to stabilize consumption of big-ticket items, expand service consumption, promote rural consumption, explore new types of consumption, improve consumption facilities, and optimize the consumption environment, said Li.

Local authorities should not unveil new measures to restrict auto purchasing, while regions that have already had restrictive measures on auto purchasing should improve these measures to adapt to local conditions, the NDRC said in the notice.

Efforts should be made to build high-quality charging infrastructure, promote the use of NEVs in rural areas, and maintain and improve the favorable tax incentives for NEV purchasing, according to the notice.

Li said that the output and sales of automobiles in China grew notably in the first half of the year, increasing 9.3 percent and 9.8 percent, respectively. During the same period, the NEV output expanded 42.4 percent year on year to nearly 3.79 million units, while the NEV sales surged 44.1 percent to almost 3.75 million units.

China introduced several measures to unleash the domestic consumption potential in the NEV sector earlier this year.

The country extended its preferential purchase tax policy for NEVs to the end of 2027 and released a guideline to support people living in rural areas to purchase and use NEVs, focusing on boosting the construction of charging infrastructures.

The state economic planner also pushed for the consumption of home appliances by rolling out trade-ins and the recycling of used home appliances, the notice said.

It said these measures, having been approved by the State Council, aimed at better implementing the strategy of expanding domestic demand, giving full play to the fundamental role of consumption in stimulating economic growth, and sustaining the country's high-quality development.

Li noted that residents' consumption sustained a good recovery in the first half of the year, evident in the revenues of the catering and tourism industry.

The combined revenues of the catering industry surged 21.4 percent year on year while domestic tourism revenue soared 95.9 percent during the period, said Li.

Li is confident in the growth prospects of domestic consumption in China as the country's economy has strong resilience and vitality.