Reuters:

The 15th Five-Year Plan proposed that in the next five years, the resident consumption rate should be significantly improved. May I ask what specific measures the government will take in 2026 to boost consumption, especially resident consumption? In addition, how can the current structural problem of "strong supply, weak demand" be fundamentally solved? Thank you.

Shen Danyang:

I'll take this question. For the second consecutive year, the government work report has listed expanding domestic demand as its top priority, with particular prominence given to the "implementation of special initiatives to boost consumption." This year's report proposes to boost consumption by both stimulating residents' willingness to spend and rolling out pro-consumption policies, addressing at a fundamental level the longstanding problem of "strong supply, weak demand." In terms of specific measures, we can summarize them neatly with a four-part formula: addition, subtraction, multiplication and division.

"Addition" means boosting demand on the demand side through income growth, while expanding the supply of high-quality products and services on the supply side. This year, for the first time, an income growth plan for both urban and rural residents has been proposed. A series of policy measures will be introduced to increase the incomes of low-income earners, increase residents' property income, and improve the remuneration and social insurance systems. The goal is to fill more residents' wallets and fundamentally boost consumption capacity. The so-called "strong supply, weak demand" phenomenon is not entirely the case in the consumption sector. For example, consumption supply also has weaknesses. On the supply side, efforts are needed to cultivate new drivers of consumption growth, roll out measures to boost service consumption and deliver public benefits, and accelerate pilot programs for new consumption formats, models, and scenarios. Priority sectors include cultural tourism, the automotive aftermarket, sporting events, the performing arts economy, and emotional and experiential services — all consumption scenarios with strong potential to meet evolving demand. Meanwhile, tailored measures will target lower-tier markets to upgrade consumption channels, drive scenario innovation, fast-track the expansion of brand chain networks, and unlock their untapped consumption potential.

So, what does "subtraction" mean? It means reducing residents' worries about the future to further unleash consumption potential. For example, this year, China will step up guarantees in areas such as health care, elderly care, and childbirth and parenting, raise medical insurance subsidy standards, and develop inclusive child care services. These measures are expected to make the public more willing and ready to consume.

"Multiplication" refers to the synergistic coordination of fiscal and financial policies to generate a multiplier effect and better drive household consumption. Last year, trade-in programs for consumer goods boosted sales of related products to 2.61 trillion yuan, benefiting 366 million people. This year, we will further step up support for offline physical retail by focusing on targeted subsidy areas — specifically, supporting trade-ins of key consumer goods with broad market reach and strong spillover effects, such as cars, refrigerators, washing machines and televisions. New products, such as smart glasses, will also be added to the subsidy list, ensuring that more people can receive subsidies and upgrade their purchases. At the same time, these efforts will help foster new growth tracks, new drivers of growth and new quality productive forces. This year, we have also established a new 100 billion yuan special fund for fiscal and financial coordination to promote domestic demand — as mentioned by both of us just now — marking a new policy initiative this year. The optimized implementation of loan interest subsidies for service-sector businesses and personal consumption loans has expanded the scope of support and raised the subsidy cap, delivering more tangible benefits to consumers.

The last is "Division." "Division" means breaking down barriers, removing obstacles, eliminating various restrictive measures on consumption, and facilitating a smoother consumption cycle. For example, targeted measures will be taken to address hidden barriers in the consumption market, simplifying the approval process for promotional activities. In some cities, we will further ease vehicle purchase restrictions, issue more car purchase quotas, support eligible street-front businesses in conducting outdoor operations, and more. These measures are also being actively promoted in various places.

The strong momentum in household consumption growth this year has already begun to emerge in the first two months. During the just-concluded Spring Festival holiday in particular, the national consumer market proved exceptionally vibrant, with numerous bright spots. The average daily sales revenue of related industries during this year's Spring Festival holiday increased 13.7% compared to the same period last year, marking a notable rise. Retail sales of goods continued to grow, demand for tourism and cultural services remained strong, and household consumption stayed active. These figures suggest that China's consumer market is poised to demonstrate strong endogenous growth momentum this year.

Thank you for your questions.