China’s central and local governments are launching a raft of new policies to spur domestic demand, amidst concerns that escalating trade tensions with the US could have an adverse impact upon the economy.
A meeting of the Chinese politburo convened on 23 April pointed to the need to “integrate the acceleration of structural adjustments and ongoing expansion of internal demand,” as well as maintain stable macro-economic operation.
According to analysts the meeting signals a shift from the previous focus upon infrastructure and real estate investment for driving domestic demand, towards a focus on consumption upgrades and investment in high-end manufacturing.
The local authorities for a number of Chinese provinces, including, Fujian, Guangdong, Yunnan, Hebei and Henan, have all recently unveiled plans for further expanding and upgrading “information consumption” within their respective jurisdictions.
Guangdong wants province-wide information consumption to reach 1.5 trillion yuan by 2020, and the deployment of 5G network commercial applications in the cities of Guangzhou and Shenzhen.
Henan province hopes that its information industry revenues will exceed one trillion yuan by 2020, and for e-commerce transactions to exceed 2.6 trillion yuan.
Shanghai Securities News reports that further policies for expanding domestic demand are now expected from the central government, that will further reduce tariffs on commercial imports, simplify quarantine inspections and customs procedures, and encourage cross-border e-commerce imports.
These measures will follow the recent cancellation of tariffs on imported anti-cancer drugs that came into effect on 1 May 2018.
Ministry of Commerce (MOFCOM) spokesperson Gao Feng previously revealed that the authority is in the process of working with relevant departments on policies and measures to expand imports, as well as further reduce overall tariff levels on imported commercial goods including vehicles and some daily consumer items.
From 23 to 24 April MOFCOM held the the “Consumption Upgrade Action Plan” conference to make arrangement for key work in relation to driving consumption upgrades in 2018, while on 28 April MOFCOM issued the issued the “Guidance Opinions on Accelerating the Establishment of the Urban Rural Public Benefit Consumption Service Centre” (关于加快城乡便民消费服务中心建设的指导意见).
Analysts expect policies in relation to the Consumption Upgrade Action Plan to rapidly follow suit, focusing in particular upon service consumption, the expansion of mid and high-end consumption, expediting green consumption, and driving upgrades to consumption channels.
Bai Ming (白明), vice-head of the MOFCOM International Market Research Department said to Shanghai Securities News that in addition to reducing tariffs the central government will also introduce policies to improve the investment environment, as well as give greater scope for growth to cross-border e-commerce platforms.
Zhang Li (张莉), head of MOFCOM’s E-commerce Research Department, said that following the conclusion of the regulatory transition period for e-commerce platforms, new policies will focus on further expanding imports by increasing the convenience of quarantine inspections and customs processing, and integrating inspection and filing systems.
The filing and registration policies for goods including imported milk products and cosmetics are also expected to be relaxed.
High-end manufacturing is another area that analysts expect to serve as a key pillar for expansions in domestic demand.
Li Chao (李超), chief macro-economics analyst with Huatai Securities, said that support measures could include incentives for increased financing, reductions in the financing costs of related industries, as well as industry support policies.