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China’s consumption drive falls on deaf ears as consumers remain cautious, ask for more
- Beijing is banking on the services sector to offset subdued external demand as it seeks a solution to China’s weak consumption dilemma
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Luna Sunin Beijing
An elusive solution to China’s weak consumption has been weighing on policymakers as Beijing banks on increased spending for future economic growth amid subdued external demand.
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Despite a raft of policies and pledges, Chinese consumers, haunted by cloudy economic prospects and reduced income, remain reluctant to spend unless there are obvious benefits.
The State Council released a 20-point directive at the weekend, vowing to increase support for nursing care, consider an extension of visa-free entries for more countries and encourage “low-altitude tourism” to spur spending on services, a sector that is growing faster than goods.
China has also allocated around 300 billion yuan (US$42 billion) worth of ultra-long-term special government bonds to support industrial-equipment upgrades and a consumer goods trade-in programme – a programme analysts argue would play a crucial role in stabilising China’s economy in the second half of the year.
However, consumers who are growing increasingly cautious about spending their hard-earned money, remain unimpressed.
Only when I am making more money would I be willing to spend more
“No measure is good unless it gives me money,” half-jokingly said Beijing-based paralegal Guo Yijia.
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