BUSINESS China launches plan to strengthen consumption


China launches plan to strengthen consumption

By Dong Feng | People's Daily app

14:57, February 12, 2019

The Chinese government launched a scheme to optimize supply and strengthen the domestic market. 


File photos: VCG

Initiated by the National Development and Reform Commission (NDRC), ten departments jointly released 24 new measures to encourage growth in consumption so that enterprises could seize new business opportunities while optimizing supply. 

Auto sales

“The slowdown in auto sales has created a gap of 0.8 percentage points in the growth of total retail sales in consumer goods, which is the main cause of the decline in consumption growth last year.” Liu Yunan, an NDRC official said. 

In 2018, the number of cars owned per 1,000 people in China was 170, which is far behind the level of major developed countries. 

“Taking the growth of the national economy and urbanization into consideration, as well as energy conservation and environmental protection standards into account, there is still room for growth in the auto market,” Dong Dajian, an official at the Ministry of Industry and Information Technology (MIIT), said that he expects NEV sales to exceed 1.5 million units this year, up from 1.26 million in 2018. 

The plan proposes six specific measures for automobile sales, including replacing old cars, and providing appropriate subsidies in provinces.

For rural car replacements, Liu said appropriate subsidies will be offered to guide the upgrade in car sales.  He said a voucher policy will be implemented.  


New product consumption

Liu defines new consumption as an "incremental" of high-quality consumption.

For instance, government will support the sale of environmentally-friendly smart appliances. Intelligent household appliances with long industrial chains that drive energy conservation and emissions reduction could be subsidized in the provinces, Liu added. 

China experienced a strong demand for household appliances last year. Household appliance consumption accounted for a fifth of total retail sales in 2018. 

In terms of total volume, China is now the world's largest producer and seller of home appliances. From a structural point of view, China's market share of intelligent products remains low.


5G commercialization

The plan is aimed at accelerating the development of international consumer center cities, upgrading information consumption and the consumption of ultra-high-definition video products, promoting the sales of goods for export, and tax rebates.

Dong said that to expand and upgrade information consumption, the government must first accelerate the development of the information and communication infrastructure and accelerate the pace of 5G commercialization. 

Preliminary estimates show that China's direct 5G commercial sales will drive the total output of the economy to over 10 trillion yuan ($1.47 trillion), with value added exceeding 3 trillion yuan, and create over 3 million jobs.


MIIT will further manage the price reduction in the telecom industry, offering more favorable products, and support the development of SMEs in the real economy.

Meanwhile, MIIT will carry out policies to build new information consumption sample cities, and encourage local governments to increase investment.

“China's rural consumption still faces development bottlenecks such as the insufficient development of the main body and a relatively backward infrastructure,” Chinese Commerce Department's Deputy Director of Market Operations Wang Bin said. 

MOFCOM will enhance the two-way flow of industrial products to the countryside and agricultural products to the city, and focus on unleashing the potential of rural online shopping and tourism consumption.

Dong added that more investments will be committed to widening the coverage of broadband networks in rural and remote areas. By the end of 2020, 98 percent of poor villages will have access to broadband.

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