The Chinese government and the Communist Party jointly issued a long list of initiatives planned on Sunday, ensuring people spend more.
The roadmap for economic stimulation included greater pensions, better health benefits and higher wages. This could slow China's domestic consumption. However, many of these tasks were assigned to the country's local governments. Many of them struggle under the enormous debt and plunging revenues from the sale of state land.
The action comes as Chinese leaders are looking for ways to readjust the economy from their current dependence on the ever-growing trade surplus, which reached around $1 trillion last year. President Trump has already imposed a 20% tariff on Chinese freight on the US. Countries in Europe, Latin America, Africa and the Middle East are also raising tariffs on flooding exports of China's manufactured goods.
Some of the documents released on Sunday appeared to be aimed at reassuring the Chinese people that their investments were safe. Authorities have pledged to “take multiple measures to stabilize the stock market” to support the real estate market, which is being undermined by falling real estate prices.
The housing market conflict has wiped out much of the savings of the middle class of China over the past three years. Chinese households are reducing spending on hotels, restaurants and other services, cramming their savings into their savings, and dealing with bank deposits that pay little attention.
One of the bright spots for China these days is the stock market. In the US, tariffs and uncertainty caused by Trump's policies dragged the S&P 500 into an amendment last week, dropping more than 10% from its peak. However, the Chinese market is positive, partly leading to the nation's enthusiasm for progress in developing its own artificial intelligence programmes. The Hong Kong stock market, where many Chinese companies trade, has grown by around 20% since Trump took office.
The “Special Action Plan for Increased Consumption” was published in the names of two organs of China's highest power: the general office of the Cabinet and the general office of the Communist Party's Central Committee. The extraordinary steps showed that Beijing leaders wanted them to show that they were serious about addressing the shortage of domestic spending.
China's National Statistics Bureau began a press conference in Beijing on Monday morning, releasing economic data from January and February. Later that day, senior officials will be talking at a press conference about initiatives to increase consumption.
The plan includes many details that can prove popular with the Chinese public when implemented. Local governments are calling for payments to be issued, increased subsidies to “people in need” and increased pension benefits for retirees. He also instructed local governments to pay the companies their late debts.
However, the summary released on Sunday did not include any new promises from the central government to help local government pay for all this.
The Chinese local government, responsible for almost all social spending, raised most of its money three years ago by selling state land to private sector developers. However, these sales collapsed due to the housing market crash.
