China Has a Plan to Spur Consumption, But Will It Work?

New measures aim to boost jobs and social safety net, but competition with US could derail plan

- Yew Lun Tian

China unveiled a much-anticipated plan on March 16 to invigorate consumption by boosting jobs and strengthening the social safety net, at a time when joblessness is creeping up and a property recovery is fizzling out.

Analysts are reserving judgment about the plan until more details are out.

Boosting consumption is a top economic priority for China in 2025 as the world's second-largest economy struggles to shake off deflationary pressures while bracing itself for a trade war with the United States.

China's consumption took a hit during the Covid-19 pandemic in 2020 to 2023 and has yet to fully recover.

Economists estimate that consumption needs to increase by 3 trillion yuan (S$552 billion) in 2025 for China to hit its economic growth target of around 5 per cent.

It will need to increase by even more than that in the very likely scenario that exports—which accounted for 30.3 per cent of economic growth in 2024—slow down in 2025 compared with the year before due to the tariffs that US President Donald Trump's administration has imposed, and vowed to increase, on China.

An annual government work report unveiled earlier in March mentioned the word "consumption" a record 31 times but was light on details.

Chinese stocks surged the day after the government announced on March 13 that a press conference would be held to talk about consumption, signaling the market's desire for a concrete action plan.

Officials at the press conference on March 17 talked about 30 measures to boost consumption that were announced a day earlier.