China released a plan to boost household spending on everything from electric appliances to furniture as economic growth slows, without providing specifics on the scale of support.
Local authorities should encourage residents to refurbish their homes, and people should get better access to credit to buy household products, according to the plan on boosting consumption released jointly by 13 government departments.
The measures come a day after China posted weaker-than-expected economic growth for the second quarter as retail sales cooled, the property market downturn deepened, and youth unemployment hit a new high.
The 11-point package is aimed at “unleashing the potential of household consumption,” according to the statement issued on the Ministry of Commerce website. The plan offered few specifics on the potential for direct cash support that many investors have been hoping for.
Households will get support to buy new smart home appliances, while regions where conditions are right should provide “appropriate” subsidies or discounted loans for purchases of low-carbon construction materials, it said.
Financial institutions will also be encouraged to boost credit support for purchases of goods for the home, the document said. Loan rates and maturities should be set at “reasonable” levels, it added.
The CSI 300 consumer discretionary index of stocks was up 0.9% as of 1:12 p.m. local time, erasing earlier losses of up to 1.2%, as traders responded positively to the policy announcement.
Monday’s official economic data prompted several banks including Citigroup Inc. to cut their growth forecasts for China this year, with some even warning that the government’s 5% target was now at risk.
The National Development and Reform Commission, China’s top economic planning body, had hinted at more measures to support consumption in a briefing with reporters earlier on Tuesday.
“Promoting consumption is currently the key to restoring and expanding demand,” Jin Xiandong, director of the NDRC’s policy research office, said. “People’s ability and expectation on consumption is still rather weak and the infrastructure and environment for consumption need to be improved.”
A slew of “pragmatic and effective” steps will be applied to boost purchases of big-ticket items, cars, electronic products, as well as consumption in rural areas, he said.
--With assistance from Catherine Ngai.
