China's state planner, the National Development and Reform Commission (NDRC), has released a notice highlighting its efforts to stimulate consumption as the post-Covid recovery in the world's second-largest economy starts to slow down.
Promoting Electric Vehicles in Rural Areas
In an attempt to revitalize the car market, the NDRC is urging local governments to relax car purchase restrictions. The commission also encourages the use of electric vehicles (EVs) in rural areas and emphasizes the need to enhance EV charging infrastructure, including the establishment of battery replacement stations.
Trade-in and Recycling Initiatives for Home Appliances
The state planner aims to boost the consumption of home appliances by introducing trade-in and recycling measures. It suggests that local governments provide subsidies to rural consumers for purchasing new appliances and trading in old ones.
Consumption Rebound Slows Down
After a strong rebound earlier in the year, China's consumption-driven recovery has tapered off in recent months. Retail sales, a vital indicator of consumption, showed a 3.1% year-on-year increase in June, significantly lower than May's 12.7% growth.
Stimulating Sports, Entertainment, and Tourism Spending
To encourage spending on sports and entertainment, the NDRC plans to expedite the approval process for movies, shows, sports events, and other performances. Additionally, the commission advocates for better implementation of a paid-leave system to promote domestic tourism, which has been a bright spot in China's consumption this year.
Renovation Projects and Infrastructure Development
The NDRC seeks to improve living conditions by renovating old residential buildings, particularly in major cities. It plans to allocate special funds and housing provident funds for these projects. Furthermore, the commission plans to carry out shantytown renovation and restore dilapidated houses in rural areas. To boost local spending, it also encourages the construction and renovation of shopping malls, markets, and convenience stores in rural regions.
Financial Support for the Consumption Sector
In a bid to support consumption-related projects, the state planner allows them to raise funds through real estate investment trusts (REITs). Additionally, it calls upon financial institutions to lower interest rates on credit cards and consumption loans while increasing lending to the consumption sector.
China's NDRC is taking decisive steps to address the slowdown in consumption and reignite economic growth. By implementing measures such as easing car purchase restrictions, promoting electric vehicles, and encouraging spending on various forms of entertainment, the country aims to overcome the recent decline in consumption and propel its economy forward.
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