China prioritises consumer spending ahead of technology as economic worries weigh

By Casey Hall, Liam Mo and Che Pan

SHANGHAI/BEIJING (Reuters) -Spurring reluctant Chinese consumers to spend has been elevated to the top of Beijing’s to-do list for 2025, leap-frogging technology and industrial production, as lawmakers look to rectify imbalances in the world’s second-largest economy.

Chinese Premier Li Qiang’s report on Wednesday to the annual meeting of the country’s parliament on major tasks for 2025 promised a “special action plan” for vigorously boosting consumption and stimulating domestic demand as the country set a roughly 5% growth target for 2025.

Until now, Chinese officials have been hesitant to introduce policies that put more money into consumers’ pockets, but such moves are being seen as increasingly important as Beijing fights a damaging trade war with Washington and needs Chinese consumers to step up and purchase the products other markets may buy less of as tariffs rise.

The term “consumption” was mentioned 31 times in Li’s report, up from 21 times last year, while “technology” received 28 mentions, slightly up from 26 in 2024, according to Guotai Junan analysts.

Last year, modernising the industrial system and developing “new productive forces”, a mantra coined by Chinese President Xi Jinping that refers to support for developing sectors such as electric vehicles and quantum computing to drive the economy, was the top priority.

China’s household spending is less than 40% of annual economic output, some 20 percentage points below the global average. Investment, by comparison, is 20 points above.

“Beijing has recognised that previous supply-side technological stimulation led to an imbalance, with consumer demand and the services sector remaining subdued,” said Tilly Zhang, a technology analyst at Gavekal Dragonomics.

Specific measures outlined to boost consumption this year include a significant expansion of China’s trade-in scheme launched last year that so far has focused on electric cars, consumer electronics and appliances.

Ultra-long special treasury bonds valued at 300 billion yuan ($41.26 billion) would be issued to support the programme this year, an increase of 150 billion yuan over last year.

“By extending the programme to more products, refining procedures for claiming subsidies and improving the recycling system for old goods, we will be able to greatly boost spending on big-ticket items,” China’s finance ministry work report said.

Beijing also pledged more support for the care of elderly people and children and the broader healthcare system, moves long believed to be needed to give Chinese consumers a bigger safety net in order to feel comfortable spending more.

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