New policy measures unveiled to encourage consumption, drive economic growth

A new plan to expand consumer spending unveiled on Sunday is expected to encourage consumption and drive economic growth in China. The country has maintained its position as the world’s second-largest consumer and the largest e-commerce market for over a decade.

Data released on Monday shows that retail sales of consumer goods – a major indicator of the country’s consumption strength – climbed 4 percent year on year in the first two months of 2025, 0.5 percentage points higher than the same period in 2024.

Despite the positive data, consumer confidence remains weak due to multiple factors, therefore, boosting consumption and expanding domestic demand remains imperative, Li Chunlin, deputy director of the National Development and Reform Commission (NDRC), said at a press conference on Monday.

The plan consists of 30 policies across eight sections, the first seven of which outline specific actions for implementation, including demand-side initiatives such as income enhancement for urban and rural residents, and measures to support consumption capacities.

On the supply side, the plan focuses on improving service quality, upgrading bulk consumption and enhancing consumption standards.

The eighth section emphasizes the need to enhance supportive policies related to investment, finance, credit and statistics.

Stock, real estate market stability

For the first time, the consumption support plan highlights the need to stabilize the stock and real estate markets.

Previous consumption policies focused primarily on the supply side, arguing that supply drives demand. However, the latest plan prioritizes the demand side as well, aiming to boost household incomes and ease financial burdens, Li noted, adding that the new measures include promoting reasonable wage growth and adjusting minimum wages.

To enhance property incomes, the plan calls for a multifaceted approach, including the stabilization of the stock market, strengthened strategic reserves and market stabilization mechanisms, and the accelerated removal of barriers preventing long-term funds – namely, the commercial insurance funds, the national social security fund and the basic pension insurance fund – from entering the market.

To better meet housing consumption needs, efforts will focus on reversing the downturn and restoring the stability in the real estate market. Financial authorities have been encouraging medium and long-term funds to enter the capital market to further stabilize stock performance.

Since last year, Chinese policymakers have introduced a range of measures, including financial stimuli and regulatory adjustments, to bolster the property sector. These include mortgage rate cuts, decreased down payment requirements, eased purchasing restrictions and financing coordination mechanisms to enhance funding support for developers.

Better consumption, well-being

By connecting consumer spending to broader social goals like elderly care improvement, child care support and work-life balance, the plan embeds consumption growth within China’s broader development objectives, reinforcing consumption as both an economic driver and a means of improving quality of life.

Solid investments will continue. In 2025, ultra-long special treasury bonds worth 300 billion yuan (41.67 billion U.S. dollars) will support consumer goods trade-in programs, doubling the 2024 allocation.

Launched in 2024, these programs drove equipment purchases and investment up by 15.7 percent, contributing 67.6 percent of overall investment growth and boosted sales of bulk durable consumer goods by over 1.3 trillion yuan, according to the NDRC.

Following its “employment first” policy, the central government plans to allocate 66.74 billion yuan in employment subsidies in 2025 to support local employment and startup assistance programs, said Fu Jinling, a Ministry of Finance official.

China will consider establishing a child care subsidy system. It will guide eligible regions to extend childbirth insurance coverage to rural migrant workers, flexible employment workers, and individuals engaged in new forms of employment who are covered by the basic medical insurance.

Regarding elderly care, the country will increase fiscal subsidies for basic old-age benefits and basic medical insurance for rural and non-working urban residents in 2025. Basic pension benefits for retirees will also be appropriately raised.

Additionally, the country will work to implement its paid annual leave system, ensuring that workers’ rights to rest and vacation are legally protected. The plan also prohibits the unlawful extension of working hours.