Policies to lift spending in focus this year

China will scale up efforts to boost consumer spending this year by pairing measures to stimulate the financial capacity of households with continued pro-consumption policies, economists said, as the world's second-largest economy accelerates its transition toward a consumption-driven growth model.

The comments came after the government work report, submitted on Thursday to the national legislature for deliberation, listed "the expansion of domestic demand as a priority".

China will adopt measures to stimulate the internal drive for household spending as well as policies to boost consumption, so as to propel further growth in consumption, according to the report.

The country will formulate and implement an income growth plan and roll out a range of practical measures to boost the earnings of low-income groups, increase residents' property income and refine the social security system.

"Income is the foundation of consumption expansion," said Luo Zhiheng, chief economist and head of the research institute at Yuekai Securities. "It affects not only current purchasing power but also, through income expectations, influences the marginal propensity to consume."

The intensity and pace of income growth plan implementation will largely determine the actual effectiveness of consumption stimulus efforts, Luo said.

Specifically, economists expect policymakers to roll out more robust measures to expand residents' property income by stabilizing the real estate and stock markets.

Sustainable consumption growth requires that households have multiple income streams in addition to wages, and confidence that their asset values will be preserved, said Su Jian, director of Peking University's National Center for Economic Research.

To better motivate consumers, according to the report, China will allocate 250 billion yuan ($36.3 billion) in ultra-long-term special treasury bonds to support consumer goods trade-in programs, and establish a special fiscal-financial coordination fund of 100 billion yuan for loan interest subsidies and financing guarantee, among others.

The country will implement initiatives to upgrade services that benefit consumers, develop a number of new, high-profile consumption scenarios with broad appeal, and move faster to nurture new areas of consumption growth.

China's consumption-boosting initiatives are undergoing a pivot this year, with policy focus shifting from durable goods such as automobiles and home appliances, to services such as tourism, travel and cultural entertainment, said Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating.

As Chinese consumers satisfy their basic material needs, their pursuit of a better quality of life will continue to rise, said Chen Xinwei, general manager of Fiman Biotechnology.

Medical aesthetics have emerged as a choice that people are willing to invest in — part of a broader shift toward services that enhance well-being, appearance and self-confidence.

"Consumers are more willing to pay for quality services where raw materials are traceable and technology is advanced," Chen said. "We will persist in developing high-value products that meet these evolving expectations."

wangkeju@chinadaily.com.cn