China Unveils Plan to Boost Domestic Consumption and Support Local Businesses
China, the world's largest exporting country with an estimated annual volume of $2,098 billion in 2024, is facing a challenge in boosting domestic consumption among its 1.41 billion population, according to the Chinese government.
In response, the Chinese Ministry of Finance has announced a stimulus plan to encourage Chinese citizens to consume more and support local businesses that do not necessarily target export markets.
It's worth noting that Chinese consumption has been low since the COVID-19 crisis, during which the country came to a standstill and production halted, without adequate government compensation to citizens forced to stay at home. Even after the crisis ended and activity resumed, the Chinese remained cautious in their spending and preferred to save.
This is why these measures aim to reverse the trend and support uncertain growth and a struggling real estate sector. Key measures in this stimulus plan include:
- Increasing social benefits
- Supporting struggling businesses
- Relaxing export regulations
In light of the 5% GDP growth rate announced by the Chinese state for 2024, the International Monetary Fund (IMF) has revised its forecast downward, predicting 4.8% growth for 2024 and 4.5% for 2025.
