Steps taken to boost domestic consumption

China will take multipronged steps, including fiscal, tax and financial policies, to unleash greater domestic demand potential, the State Council — the country's Cabinet — said on Friday.

Policymakers should optimize the implementation mechanism of the consumer goods trade-in program to better leverage its role in expanding domestic demand, according to the State Council executive meeting chaired by Premier Li Qiang.

The National Development and Reform Commission, the country's top economic regulator, said earlier this month that the fourth and final batch of 69 billion yuan ($9.6 billion) in ultra-long-term special treasury bonds will be allocated in October to support the trade-in program, completing the planned 300 billion yuan total for the whole year.

The program has spurred purchases of more than 109 million home appliances, involving more than 66 million consumers, the Ministry of Commerce said in late July.

Moreover, the program has driven sales of more than 74 million digital devices and nearly 9.06 million electric bicycles, the ministry said.

However, Luo Zhiheng, chief economist at Yuekai Securities, cautioned that as the effectiveness of trade-in programs for boosting durable goods consumption — which kicked off in 2024 — is likely to wane over time, greater efforts should be made to bolster services consumption.

Policymakers could put in place similar incentives earmarked from the fiscal funds to boost consumption in the services sector, as China's current government debt-to-GDP ratio remains relatively low among major economies, Luo added.

In the first half of 2025, China's total retail sales of consumer goods increased 5 percent year-on-year, while retail sales of services grew 5.3 percent, said the National Bureau of Statistics.

To this end, the Friday meeting also called for efforts to stimulate sports consumption demand, including expanding sports consumption scenarios and encouraging localities to host sporting events.

It was stressed at the meeting that greater emphasis should be placed on mobilizing market forces to drive the development of the sports and recreation sector, expand consumption scale, enhance the vitality of sports business entities and promote high-quality growth of the sector overall.

Days ahead of the meeting, the country had unveiled a new loan interest subsidy for businesses in eight eligible categories of the service sectors, including sports, to help them enhance service offerings and spur consumer spending appetites.

Under the initiative, businesses can receive subsidies for loans of up to 1 million yuan. Borrowers will receive a 1 percentage point annual interest rebate for up to one year.