China outlines plans to boost consumer spending as Trump's tariff war
threatens exports
[March 18, 2025] By
KEN MORITSUGU
BEIJING (AP) — Chinese government officials on Monday outlined steps
they are taking to try to boost domestic demand by getting consumers to
spend more as a tariff war launched by U.S. President Donald Trump
threatens to curb the country's exports.
The central bank will study creating new tools to increase low-cost
funding for important consumption areas, said Che Shiyi from the
People’s Bank of China, the central bank.
On the spending side, the government has already provided a first
tranche of 81 billion yuan ($11.2 billion) to local governments in
January for a rebate program to boost auto and appliance sales,
announced Li Chunlin, the vice chairman of the National Development and
Reform Commission.
The officials spoke at a news conference one day after the government,
together with the ruling Communist Party, released a multi-faceted plan
to try to boost consumer spending. The moves seemed designed to
demonstrate that the government is committed to reviving a sluggish
economy.
“While there are few new details on how the government will increase
spending, the details of the plan show a greater determination to tackle
China’s consumption problem this year,” Lynn Song, the chief Greater
China economist at ING bank, wrote in a report on the plan.
New government data released Monday showed signs of improvement in the
first two months of the year, though housing market weakness remained a
drag on growth.
Retail sales were up 4% in January and February compared to last year,
more than forecast. Industrial production rose 5.9%, the National Bureau
of Statistics reported. The stronger than expected data helped buoy
stock markets in Asia.
A bureau spokesperson said the economy is moving in the right direction
but cautioned that challenges remain at home and abroad. Trump has
imposed a 20% tariff on Chinese products, which could set back an
economy with a high dependence on exports and late on Sunday, he
reiterated his intention to push ahead with more tariffs in early April.
“The external environment has become more complex and grim, domestic
effective demand is insufficient, some companies are facing difficulties
in production and operation, and the foundation for the continuous
recovery of the economy is still unstable,” Fu Linghui said at a news
conference.
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A man walks by a moral in a new commercial district, in Beijing,
Monday, March 17, 2025. (AP Photo/Andy Wong)
 He added, though, that China’s
foreign trade has proven resilient.
“China’s industrial system is complete, and its innovation
capabilities are gradually improving,” he said. “There is a
foundation and conditions for the steady development of foreign
trade.”
The long-running real estate crisis has depressed consumer
confidence and spending. Real estate investment fell 9.8% in the
first two months of the year, the statistics bureau said.
The good news is that real estate price declines have slowed, though
they have yet to bottom out. Prices for both new and existing homes
fell in January and February, but at a much slower pace than most of
last year.
ING bank said it expects real estate prices to stop falling this
year but they likely will not rebound quickly.
“February’s data showed that it would be wise for officials not to
take their foot off the pedal in terms of policy support,” Song
wrote in a report.
The plan released Sunday includes various initiatives, from
accelerating the development of artificial-intelligence related
products such as autonomous driving and smart wearables to
developing winter tourism in parts of the country that get a lot of
snow and ice, the official Xinhua News Agency said.
It also included measures to boost spending power by expanding the
minimum age, benefits for older people and health insurance for
rural residents, Xinhua said.
Earlier this month, the government announced the rebate program, now
in its second year, would double to 300 billion yuan in 2025. It
offers rebates to people who trade in old appliances or automobiles
for new ones.
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Associated Press researcher Yu Bing contributed to this report.
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