China has recently announced a series of measures aimed at reviving its economy and improving the business environment. Although the country has refrained from major monetary or fiscal stimulus, the government and Communist Party have made broad assurances to enhance consumer spending, encourage private sector investment, and facilitate access to funding for businesses.
To stimulate consumer spending, thirteen government departments outlined a plan on July 18 to increase household expenditure on a wide range of consumer goods, from electric appliances to furniture. The government is encouraging local authorities to support residents in refurbishing their homes and improve access to credit for purchasing household products.
Additionally, the government agencies announced a plan on July 28 to boost the manufacturing of small consumer goods, predominant in China’s export industry. This includes increasing the sales of green and smart home goods in rural areas and expanding the use of battery products in electric cars, power stages, and telecommunications. An expanded exchange dedicated to assisting small firms in accessing funds will also be implemented.
The Communist Party’s Politburo signaled a potential easing of property policies during its July meeting. This has led to speculation that some of the strict restrictions imposed over the years to control the property market may be reversed. The housing minister has also called for financial regulators and lenders to strengthen efforts to revive the sector, including considering homebuyers who have previously paid off mortgages as first-time purchasers. Furthermore, loan relief for developers has been extended to ensure the completion of homes under construction.
To stimulate car purchases, especially for new-energy vehicles, the National Development and Reform Commission (NDRC) released a 10-step plan on July 21. This plan includes measures to reduce the costs of electric-vehicle charging and extend tax breaks. Additionally, the Ministry of Commerce launched a six-month campaign in June to boost car purchases and promote electric vehicle adoption in rural areas.
Recognizing the importance of private businesses, the Communist Party and government jointly pledged to improve conditions for these enterprises after an extensive regulatory crackdown on the technology sector. In a series of 31 measures announced on July 19, Beijing promised to treat private companies the same as state-owned enterprises, consult entrepreneurs on policy drafting, and reduce market entry barriers for firms. The central bank has also encouraged lenders and financial markets to provide support for innovation, tech-related acquisitions, and investment in startups.
To stimulate economic growth, the NDRC released a plan on July 24 to encourage private firms’ investment in key industries, such as transportation, clean energy, advanced manufacturing, and modern agricultural facilities. Through local governments, businesses can invest in over 2,900 projects worth a total of 3.2 trillion yuan ($445 billion). The government intends to finance these projects through bank loans and real estate investment trust products. Furthermore, the renovation of urban villages will be prioritized, with the government seeking more private capital to expand domestic demand and develop cities.
In an effort to provide monetary stimulus, the People’s Bank of China (PBOC) cut its main policy interest rates on June 13. This move aimed to counter a slump in real estate, declining private sector investment, and growing youth unemployment. On July 20, the PBOC adjusted regulations to allow companies to borrow more from overseas, facilitating greater inflow of foreign capital. The central bank also set a stronger daily fixing for the currency.
China’s recent measures demonstrate the government’s commitment to revive the economy and improve the business environment. By focusing on boosting consumer spending, supporting private businesses, encouraging investments in key industries, and implementing monetary policy adjustments, the Chinese government aims to mitigate the economic challenges while promoting sustainable growth. These measures signal a proactive approach to stimulate the nation’s economy and inspire confidence among investors and businesses alike.
Market Capital Research 