China accelerates consumption-driven growth model

The plan eyes on fiscal-financial synergy and more incremental policies are on the horizon

The plan put forward a series of fiscal and financial support policies and called for strengthening the synergy of pro-consumption policies. From the perspective of policy deployment, more incremental policies to promote consumption are already on the way.

Fiscal measures include:

-Increasing ultra-long special treasury bonds for trade-in programs from 150 billion yuan to 300 billion yuan.

-Expanding central budgetary investment in education, healthcare, and elderly care.

-Introducing two new loan interest discount policies for consumers and service providers.

Financial measures:

- Encourage financial institutions to increase the deployment of personal consumption loans.

- Develop new structural monetary tools.

Zhang Bin, deputy director of the Chinese Academy of Social Sciences' Institute of World Economics and Politics:

The two policies of loan interest discounts for individual consumers and service providers have a leverage effect to boost consumption from both ends of supply and demand. The former drives demand for end products, while the latter will enhance the supply of public services.

Tian Lihui, head of the Institute of Finance and Development at Nankai University:

In product design for the plan to encourage financial institutions to increase the deployment of personal consumption loans, the establishment of a hierarchical credit system can be considered. For example, pilot "inbound consumer loans" for foreign tourists. In terms of process innovation, credit card virtualization can be explored, and payment can be completed by directly binding consumption scenarios through digital wallets.