China redoubles efforts to boost domestic demand as trade war bites
The Chinese government has ordered policies and resources to be geared towards sectors including tourism and sports to help give a broad-based boost to domestic consumption as China’s trade spat with the United States threatens to slow the economy.
According to a detailed document issued by the State Council, or cabinet, late on Thursday, the government is marshalling resources to support consumer spending on leisure cruises, yachts, self-driving cars, recreation vehicles and air travel.
Shares in China advanced on Friday, led by consumer stocks, after the publication of the consumption document. An index tracking major consumer firms .CSI300CS rose 1.76 percent.
In the document, the government said it will encourage innovation in consumer finance and broaden the development of consumer loans.
It will also help individuals boost their property income, and push for more individual income tax reform measures such as increasing the number of tax-deductible items.
The government will also enact laws to innovate consumption in sectors including the sharing economy, where people rent out cars, homes and even pets to strangers for a fee, often over a mobile phone platform.
It will also develop several cities into centers for international consumption.
The document was published days before the peak National Day golden week when millions of Chinese people are expected to take time off to travel for leisure.
Shaolin Temple and other top tourist spots across China have already been ordered to slash admission ticket prices, some by as much as 30 percent.
“With external demand growth being hindered, expanding domestic demand is undoubtedly the correct strategy,” wrote the Study Times on Friday, a newspaper influential in interpreting and disseminating directives from the ruling Communist Party.
But the government’s call to consume could be hampered by rising rents, burdensome mortgages and consumer debt.
In the first half of this year, per capita disposable income growth slowed to 6.6 percent compared with 7 percent a year earlier, according to official data.
In an other negative sign for the economy, manufacturing activity in Guangdong, China’s most populous and biggest exporting province, contracted in August for the first time since March 2016, according to an official survey from the province’s Economics and Information Commission.