Weekend – China released a 30-point plan aimed at boosting domestic consumption

China has released a 30-point plan aimed at boosting domestic consumption as a key driver of economic growth. This is line with this year’s Government Work Report at the just closed two sessions:

• China will “place a stronger economic policy focus on improving living standards and boosting consumer spending”

The plan was issued on Sunday by the General Office of the Communist Party of China Central Committee and the General Office of the State Council. These are usually just shortened to the ‘State Council’.

The focus is on increasing household income, reducing financial burdens, and improving the consumption environment to encourage spending. It also emphasizes generating effective demand through high-quality supply and removing barriers that restrict consumption. This initiative aligns with broader economic policies prioritizing domestic demand over traditional growth drivers like real estate, particularly as China faces global economic headwinds and trade protectionism.

A major component of the plan is raising wages and expanding income sources for both urban and rural residents. It includes employment support programs and efforts to stabilize financial markets, such as expanding property income channels and enhancing stock market stability. Additionally, the trade-in scheme for consumer goods, initially launched in 2023, will receive 300 billion yuan ($41.45 billion) in ultra-long treasury bonds to promote upgrades in automobiles, home appliances, and other durable goods. The plan also extends to cultural, sports, and tourism consumption, reflecting a shift toward improving quality of life rather than just increasing spending volume.

President Xi has recently increased his focus on the economy.

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Early FX rates are not indicating AUD traders (the AUD is a proxy for the China trade) are paying a lot of attention to this announcement yet. Its still early though. AUD/USD is circa 0.6321, not a lot changed from its late Friday level.

This article was written by Eamonn Sheridan at www.forexlive.com.