China Launches Special Action Plan to Revitalize Domestic Consumption

China's State Council released a comprehensive action plan to stimulate domestic consumption by raising incomes and introducing a childcare subsidy scheme. The plan addresses recent declines in consumer demand due to disruptions like COVID-19 and a property slump, aiming to reduce economic reliance on exports and investment.

China's State Council has announced a 'special action plan' designed to reinvigorate domestic consumption. This initiative is set to increase residents' incomes and establish a childcare subsidy scheme among other measures, amidst challenges such as COVID-19 and a lengthy property downturn, which have impacted consumer demand negatively.

The outlined plan was distributed to various regions and departments, urging them to 'vigorously boost consumption' by expanding domestic demand, enhancing consumption capacity through income increases, and burden reduction. The announcement follows Chinese Premier Li Qiang's recent address emphasizing the necessity of strengthening household expenditure to counterbalance dwindling external demand.

While the action plan is comprehensive, it stops short of offering specific financial assistance for local governments to enact their strategies. It emphasizes the growth of both urban and rural incomes, mentions reforms aimed at boosting farmers' incomes, and suggests new measures for stabilizing the stock market. Additionally, proposals include establishing a childcare subsidy system, facilitating flexible work options, enhancing tourism by waiving visa requirements, and extending paediatric care hours at hospitals.

(With inputs from agencies.)