China’s government has mapped out an “action plan” that calls for supporting employment and the stock market to stimulate domestic consumption, but the move generated little immediate excitement among investors.
After the plan was unveiled on March 16, the CSI 300 Index, a gauge of Chinese stocks listed on mainland exchanges, opened 0.35% higher next morning. It finished the day 0.24% lower, however. The index had gained 2.43% on March 16 and was already trading at its highest level in about three months.
Retail sales for January and February, announced March 17, beat expectations with a 4.0% year-on-year climb. But Chinese policymakers are eager to show their determination to build momentum.
The eight-point plan follows fiscal stimulus measures outlined at the National People’s Congress (NPC) in early March, and comes as an escalating trade war with US President Donald Trump threatens China’s export engines. The plan’s objectives are to “vigorously stimulate consumption” and “comprehensively expand domestic demand,” according to state news agency Xinhua.
The list of actions features promoting income growth at the top, followed by supporting consumption capacity, enhancing service consumption and upgrading major consumer goods. Further down the list are enhancing consumption quality and improving the consumption environment.
Li Chunlin, vice chairman of the National Development and Reform Commission (NDRC)—the country’s top economic planning agency—told reporters on March 17 that the growth in retail sales was bolstered by the government’s consumer subsidy program. But he also conceded that “consumer confidence and expectations are relatively weak.”
He said the government’s desire to improve the economic outlook prompted the first consumption policy blueprint that emphasizes stability of the stock and real estate markets.
The action plan is a “comprehensive, overarching” document made by joint efforts across more than 30 departments, Li explained. But details on how the points will be implemented are still vague. Li said policies “are actively being formulated by relevant departments and will be released in due course.”
Li added that the NDRC will monitor the effectiveness of the subsidy program, which was expanded to include smartphones and other electronics earlier this year, and determine whether it will add more items down the road.
The section on promoting income growth highlights a need to expand unemployment benefits and employment support programs, an acknowledgement of the high jobless rate among college graduates. It also calls for “scientifically and reasonably” raising the minimum wage.
In addition, the document pledges to “stabilize the stock market” and “accelerate the entry of long-term capital” to increase financial income, positioning stocks as an alternate source of household wealth amid a prolonged property market downturn.
Enhancing service consumption includes optimizing child care and elderly care services as well as gradually increasing the list of countries eligible for visa exemptions to promote tourism.
Few additional details were outlined for the subsidy program for purchases of cars, household appliances and certain electronics like smartphones. The action plan says ultralong special government bonds—RMB 300 billion (USD 42 billion) worth of which are to be issued—will be allocated to the subsidy program, supporting local governments’ initiatives.
At the NPC, China targeted gross domestic product growth of “around 5%” for 2025, the same as last year, and outlined various stimulus plans to promote consumption. Yet a string of mixed economic data suggests an uphill battle to stop the economy from falling into a deflationary spiral.
China’s retail sales expanded at a faster pace at the start of 2025 thanks to increased services spending during the Lunar New Year holiday, while growth in industrial production slowed.
Total retail sales of consumer goods, a gauge of household spending, were up 4.0% in January and February, according to data published by the National Bureau of Statistics (NBS) on March 17. The reading beat a rise of 3.7% in December and a consensus forecast of 3.8% in a Bloomberg poll.
Industrial output rose 5.9% on the year in the first two months, falling short of December’s 6.2%. It outperformed a forecast of 5.3% by Bloomberg.
New home prices in February declined from January in 45 of 70 major cities tracked by the NBS, three more than in January. The number of cities that saw an increase in prices fell by six cities to 18, while the rest were flat.
Despite the still-sluggish property sector, fixed-asset investment increased 4.1% during the period, supported by the manufacturing sector. The pace accelerated from the 3.2% recorded for the full year of 2024.
Property investment in the first two months fell 9.8% year-on-year, versus a 10.6% decline last year.
The NBS typically releases combined data for January and February to minimize the disruption from the shifting dates of the Lunar New Year holidays.
In February, the consumer price index fell by more than analysts had expected. Growth in Chinese exports for the first two months of the year slowed sharply from December, signaling the effect of front-loading ahead of additional US tariffs that came into effect in early February.
Louise Loo, China lead economist at Oxford Economics, said in a note on March 17 that while the data published for January and February so far suggests production levels in China should remain “relatively robust,” domestic demand still needs to be “stepped up in order to arrest persistent disinflationary pressures.”
“The timing of China’s new special plan to boost consumption, which rightfully focused on ‘upstream’ consumption problems such as income support, points to high policy sensitivity to weak domestic demand data this year,” Loo said, warning that the impact of previously announced measures and Lunar New Year spending “could fade quickly if stimulus were not kept up.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.