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Boosting Chinese Consumption with Trade-Offs

China's most recent major push to boost household consumption comes with trade-offs. Pressure grows on Beijing for policies with longer-term impact. Annual parliament meeting may give more clues on policy shifts.

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How China Could Boost Its Weak Consumption. Δ1.90

China has repeatedly pledged to make the consumer sector a more prominent driver of economic growth but is yet to implement any structural policy changes to achieve this.Analysts say potential costs in the trillions of dollars and risks that reform could bring instability are making officials wary of bold policy decisions.Below are policy options for Beijing and some of the trade-offs involved.

China Prioritises Consumer Spending Ahead of Technology as Economic Worries Weigh Δ1.88

China is shifting its focus to boosting consumption in 2025, promising a special action plan to stimulate domestic demand and meet its 5% growth target. The country's household spending remains less than 40% of annual economic output, significantly lower than the global average. Beijing aims to support big-ticket consumer items through an expanded trade-in scheme and issue ultra-long special treasury bonds.

China Ramps Up Stimulus to Guard Economy From Changes 'Unseen in a Century' Δ1.84

China has introduced additional fiscal stimulus measures aimed at bolstering consumption and mitigating the adverse effects of an escalating trade war with the United States, with a growth target set at around 5%. Premier Li Qiang highlighted the urgency of addressing the "unseen" global changes and the impact on China's trade, technology, and household demand, emphasizing the need for a shift from an export-driven model to one that prioritizes internal consumption. Despite increased government spending plans, analysts express skepticism about the effectiveness of these measures in generating significant consumer demand.

Beijing Buzzwords Hint at Slow-Burn Consumer Fix Δ1.83

The Chinese government's focus on boosting consumption among young workers may lead to more sensible policies that can boost spending power over the long term, but deflationary risks mounting, officials are under pressure to deliver quick stimulus. Deciphering policy signals from the annual legislative session in Beijing is a daunting task, with every spring bringing around 5,000 senior lawmakers and political advisors gathering for a week to rubber-stamp the party's priorities. The government has lowered its annual inflation target to "around 2%" for 2025, the lowest figure since 2003.

China Consumption Slump Deepens as February Prices Drop Δ1.81

Consumer prices in China have fallen for the first time in a year, with authorities struggling to revive spending amid intensifying trade headwinds. The country's exports are expected to be impacted by US tariffs, which could limit economic growth this year. A prolonged trade war would likely keep inflation at bay, but also mean that consumers cannot rely on exports for strong economic recovery.

China's Deflationary Pressures Deepen in February Δ1.81

China's consumer price index in February missed expectations and fell at the sharpest pace in 13 months, while producer price deflation persisted, as seasonal demand faded and households remained cautious about spending amid job and income worries. The government has vowed to boost consumption through various measures, but analysts expect deflationary pressures to continue. China's economy is still struggling with weak consumption capacity and willingness.

China Pledges More Resources to Support Employment Δ1.78

China will step up resources and funding to support employment and unveil new policies to help college graduates get jobs, as the external environment could become more complex and severe. China faces an arduous task to stabilise and expand employment in 2025, minister Wang Xiaoping said, estimating this year's employment will be generally stable. The government aims to provide support for underemployed workers, including temporary job placement services and vocational training programs.

China Faces Deflationary Spiral as Consumer Prices Fall Δ1.78

Consumer prices fell in China in February for the first time in 13 months, driven by weak demand and the early timing of the Lunar New Year holiday. The National Bureau of Statistics reported a 0.7% drop in consumer prices compared to last year, with prices down 0.2% from January on a monthly basis. As policymakers face flat to falling prices, they risk creating a deflationary spiral that could drag down the economy.

China's Unwavering Opening-Up Efforts Unlock Global Opportunities Δ1.78

A report from People's Daily highlights China's 2025 action plan to stabilize foreign investment, which outlines 20 policy initiatives across four strategic priorities: phased expansion of autonomous market opening, enhanced investment facilitation, functional upgrades to open-economy platforms, and service system optimization. The move reinforces China's commitment to institutional opening-up, aligning with global investors' calls for predictable regulatory frameworks. Opening up is a fundamental national policy of China, aiming to enrich the path of Chinese modernization by unlocking new frontiers.

China's Countermeasures Spark Market Uncertainty. Δ1.78

China has swiftly retaliated against fresh U.S. tariffs, announcing 10%-15% hikes to import levies covering a range of American agricultural and food products, and placing twenty-five U.S. firms under export and investment restrictions. The move aims to deescalate tensions by limiting the impact on its domestic market, but raises concerns about the potential for a prolonged trade war. As the situation unfolds, market participants are left wondering how long China will resist further escalation.

Chinas Deflation Crisis Deepens as Retailers Try to Lure Customers with Discounts Period Δ1.78

China's deflationary economy is intensifying, with the country's consumer price index falling to -0.7% in February, sparking concerns about its impact on growth. As a result, retailers are becoming increasingly desperate to attract customers, with some stores offering flash sales four times a day, including the Wankelai store in Beijing, which sells clothing, snacks, and basic household products. The strategy is driven by consumers who are grappling with uncertainty about jobs and incomes, leading them to seek value-for-money purchases.

China Consumption Slump Deepens As February Prices Drop Δ1.77

China's consumer prices dropped for the first time since January 2024, falling 0.7 percent year-on-year in February, as authorities struggle to kickstart spending amid a pandemic-induced slump in domestic consumption.The country's key measure of inflation declined more sharply than forecast, reversing the uptick recorded in January when Lunar New Year festivities boosted inflation. The steep decline is attributed to various factors including the shift in lunar new year celebrations, holidays, and price fluctuations of international staple commodities.According to Dong Lijuan of the National Bureau of Statistics, the drop was primarily caused by these seasonal adjustments.

China Maintains Defence Spending Increase at 7.2% Amid Roiling Geopolitical Tensions Δ1.77

China will boost its defence spending by 7.2% this year, maintaining a steady growth rate as Beijing faces headwinds from three years of sluggish economic expansion amid mounting geopolitical challenges from Taiwan to Ukraine. The increase is well above China's economic growth target for this year and reflects Beijing's ambitions for continued military modernisation amid roiling geopolitical challenges. This year's report stresses the importance of combat readiness and scientific and strategic improvements, while also pledging to "continue improving the political conduct of the military".

China to Boost Support for AI, Science and Tech Innovation Δ1.77

China said on Wednesday it would boost support for the application of artificial intelligence (AI) models and the development of venture capital investment, in a bid to foster more technology breakthroughs and become more self-reliant. The country aims to create an enabling environment for innovation that encourages exploration and tolerates failure. To achieve this, China plans to explore new models for national laboratories and give strong support to young scientists and engineers.

China's Property Sector Is Showing Positive Changes, Minister Says Δ1.77

China's housing minister has expressed optimism about the country's property sector, citing improving market confidence as policymakers aim to set a more upbeat tone for the economy in 2025. Despite several tough years for the real estate industry, the minister stated that the market has shown signs of stabilisation since January and February. However, analysts predict that home prices will continue to drop further this year, with some estimates suggesting a decline of up to 30% since 2021.

China’s Inflation Declines Below Zero for First Time in Year Δ1.77

China’s consumer inflation has unexpectedly dropped below zero for the first time in 13 months, reflecting ongoing deflationary pressures within the economy, with the consumer price index declining by 0.7% year-on-year. This downturn is attributed to weak domestic demand, a decline in services prices, and a rare negative reading for core inflation, which fell by 0.1%. Analysts predict that a clearer picture of inflation trends will emerge in March as the effects of recent stimulus measures are assessed.

China to Boost Food Imports From Latin America, Europe as US Trade War Escalates Δ1.77

China is set to increase its purchases of meat, dairy, and grains from countries such as Brazil, Argentina, Spain, the Netherlands, and others in Europe. China's reliance on U.S. farm exports has decreased since the 2020 trade war, prompting the country to seek alternative sources. China's tariffs on U.S. agricultural goods are expected to reshape global trade flows.

China's Consumer Price Index Contracts in February Δ1.76

China's consumer inflation in February fell at the quickest pace since January 2024, while producer price deflation persisted. The drop in consumer prices was largely driven by a decline in food and energy costs, which decreased by 3.2% and 1.8%, respectively. The slowdown in price growth is seen as a sign of moderating demand in China's economy.

China’s Factory Activity Growth Hits 3-Month High Amid Tariff Uncertainty Δ1.76

China's factory activity expanded at its fastest pace in three months to 50.8 in February, according to a private-sector survey, as millions of migrant workers returned to work after an extended Lunar New Year holiday. The seasonally adjusted Caixin/S&P Global manufacturing purchasing managers' index beat expectations and accelerated from 50.1 in January and 50.5 last December. This growth is attributed to "demand strengthened from foreign clients" due to U.S. importers front-running tariffs.

China to Accelerate Annual Stockpiling of Strategic Commodities Δ1.76

China said on Wednesday it would accelerate the annual stockpiling of strategic fuels, food and other commodities. In a report on Wednesday, China's state planner said it would steadily advance the construction of storage facilities for grain, petroleum and other commodities. The move aims to bolster the country's energy security and food supplies amid rising global tensions.

China Manufacturing Hits 3-Month High but Us Tariff War Clouds Outlook Δ1.76

China's manufacturing activity expanded at the fastest pace in three months in February as new orders and higher purchase volumes led to a solid rise in production. The official purchasing managers' index (PMI) rose to 50.2 in February, beating analysts' forecasts, but doubts remain about whether this upturn can be sustained amid a trade war with the US. Chinese policymakers are expected to announce economic targets and fresh policy support next week, which investors will watch closely for signs of further support for the struggling property sector.

China Trade Surge Pposes Challenge for Trump's South America Influence Δ1.76

China's huge and growing trade lead dulled the impact of Trump's measures, a warning sign of the potential limits more broadly of a punitive approach in a world where the United States has a growing number of economic rivals. South America's exports to China have more than doubled in the past decade, driven by booming commerce in recent years that boosted China's influence. The pragmatic U-turn by a natural U.S. ally underscores the challenge for President Trump in resource-rich South America, where booming trade with China has undermined his efforts to promote U.S. interests.

China Announces Plans for Major Renewable Projects to Tackle Climate Change Δ1.76

China has announced a package of major renewable energy projects aimed at peaking its carbon emissions before 2030 and becoming carbon neutral by 2060. The country plans to develop new offshore wind farms, accelerate the construction of "new energy bases" across its desert areas, and construct a direct power transmission route connecting Tibet with Hong Kong, Macao, and Guangdong in the southeast. However, despite these ambitious plans, China's economy is struggling to become more energy efficient, leaving analysts questioning whether the country can meet its environmental targets.

China Imposes Extra Tariffs on Various U.S. Products From March 10 Δ1.75

China has announced it will implement additional tariffs ranging from 10% to 15% on selected U.S. imports starting March 10, as indicated by the Chinese finance ministry. This move is likely a response to ongoing trade tensions and reflects the shifting dynamics in U.S.-China economic relations. The tariffs could further complicate the already strained trade landscape, potentially impacting businesses and consumers on both sides.

China Will Work to Firmly Advance 'Reunification' With Taiwan, Premier Says Δ1.75

Chinese Premier Li Qiang has reiterated China's commitment to "firmly advance" reunification with Taiwan, opposing any external interference while appealing to the Taiwanese people as "fellow Chinese." The language used in this year's report marks a shift from previous statements, dropping the emphasis on "peaceful" reunification, reflecting China's increasing military pressure on the self-governing island. As tensions escalate, China's stance on Taiwan continues to prioritize economic relations, indicating that while reunification remains a key agenda, it may not be the primary focus amid broader geopolitical challenges.