Coordinated policy support needs to focus on stimulating demand

Latest data released by the National Bureau of Statistics show that, with the gradual implementation of more proactive fiscal policies and appropriately accommodative monetary policies, China's economy was stable from January to February. Various indicators exceeded market expectations.

Retail sales, a key measurement of consumer spending, surged 4 percent year-on-year over the January-February period, after rising 3.7 percent in December. The country's value-added industrial output, which measures activity in the manufacturing, mining and utilities sectors, expanded by 5.9 percent year-on-year, following a 6.2 percent increase in December. In the same period, fixed-asset investment, which tracks spending on infrastructure, property, machinery and equipment, rose by 4.1 percent year-on-year, up from the 3.2 percent growth recorded for the entirety of 2024.

The country's household consumption demand and structure are continuously upgrading, the proportion of service-based consumption expenditures is steadily increasing, and new market space is constantly expanding. At the same time, there is significant investment potential in areas such as new industrialization, new urbanization, and energy-saving and carbon-reduction transformations.

Strengthening China's domestic demand is essential to form a virtuous cycle between supply and demand. In addition to implementing a more proactive package of incremental macro policies, the new plan on special initiatives to boost consumption will translate into various supportive policies. These policies seek to enhance consumption capacity by increasing incomes and reducing burdens. The aim is to create effective demand through high-quality supply and to strengthen consumption willingness by optimizing the consumption environment, thereby releasing the potential of consumption.

Currently, all policies and initiatives are centered around supporting employment expansion, promoting household income growth and burden reduction, and strengthening consumption incentives to form a virtuous cycle between economic development and livelihood improvement. By enhancing the coordination of fiscal, monetary, employment, credit, livelihood and regulatory policies, China can effectively and comprehensively expand the consumption of goods and services, and thereby unleash vitality.