Chinese netizens say they have adopted an "extremely frugal lifestyle." (Video screenshot)
[People News] As China's economy has remained sluggish for years, the authorities have repeatedly emphasized the need to boost domestic consumption. However, they have yet to introduce effective stimulus measures. On March 16, the government suddenly announced a special action plan consisting of 30 measures aimed at revitalizing consumer sentiment and restoring confidence in household spending. Some netizens pointed out that the root cause of the Chinese public’s loss of confidence is the corrupt CCP government. Experts also believe that without genuine structural reforms, sustainable consumption-driven growth will be impossible.
On Sunday, March 16, the General Office of the CCP Central Committee and the General Office of the State Council released the Special Action Plan for Boosting Consumption, calling for "a strong push to boost consumption and a comprehensive expansion of domestic demand." This aligns with statements made by CCP leader Xi Jinping at the end of 2024.
The plan consists of 30 specific measures, focusing on increasing income, stabilizing the stock market, halting the decline in the real estate market, and improving healthcare and elderly care services. However, at a press conference in Beijing on Monday (March 17), CCP officials did not disclose any details regarding fiscal spending.
Observers have noted that the newly announced plan on Monday largely repeats the budget figures presented during the Two Sessions last week.
Will the CCP’s new plan succeed in restoring Chinese consumers' confidence in spending?
A user on a video platform remarked, "The real issue is that the Chinese people have lost faith in the Communist Party of China (CPC). The corrupt CPC treats ordinary citizens merely as chives. Under such governmental management, there is no hope for the recovery of China's economy. As a result, people are forced to minimize their living needs, seeking only enough food to survive, which has become their greatest satisfaction."
Chinese netizens have stated, "For me this year, the biggest issue is the disappearance of consumption, rather than a downgrade in consumption." They have completely given up hope for economic recovery.
Numerous Chinese netizens have shared videos demonstrating how they are living a "super low-consumption lifestyle" through frugality. For instance, they have turned off their humidifiers and are using damp towels hung up to achieve the same humidifying effect. They have also embraced a practice of "bringing their own wind," such as ceasing to buy drinks and carrying a water cup with them whether they are out or at work; stopping the purchase of wet wipes and instead wetting napkins at home to carry in a gum tin for use when they go out, among other strategies.
Even parents who previously indulged their children's every academic request have started to limit their children's allowance, controlling their spending behavior with a fixed amount.
Economic experts are also skeptical about the new plan introduced by the CPC, believing that the CPC continues to misdiagnose the root of the problem and will not see any positive outcomes.
American economist Huang David told DAjiyuan that without genuine structural reforms, long-term consumption-driven growth cannot be realized.
He noted that the Beijing authorities aim to utilize consumer spending to steer the economy back onto a growth path. However, the willingness of residents to spend is lacking; amid a sluggish real estate market, rising unemployment, and slowing income growth, people are more inclined to save rather than spend. A straightforward credit stimulus may not yield effective results. 'Official measures might provide some short-term stimulus, particularly for specific sectors like automobiles, home appliances, and cultural tourism. However, the sustainability of consumer recovery is still questionable.'
Huang David believes that local governments have already poured substantial funds into infrastructure investments and real estate relief efforts. If they further increase fiscal spending or expand credit issuance, it could intensify the debt pressure on local governments.
George Magnus, an economist and researcher at the China Center of Oxford University, expressed on social media platform X that, in his opinion, the Chinese Communist Party (CCP) government has misinterpreted the causal relationship, stating, 'the government is misdiagnosing the problem.'
He remarked: 'The CCP government appears reluctant to invest more based on the existing foundation. Furthermore, most of the proposed measures focus on increasing the supply of consumer goods and services, which is not the core issue facing China right now.' 'Beijing believes the problem lies in a lack of confidence and limited consumption opportunities, and its policy direction reflects this. However, the real issue stems from the government's overall industrial and export model, which is the fundamental cause of the low confidence among consumers and businesses.'
Magnus noted that the 'Plan' aligns with the tone set during last year's Third Plenary Session of the Communist Party of China, the Central Economic Work Conference, and the National People's Congress held earlier this month. However, there are no detailed financial support measures accompanying these demand-oriented initiatives.
Xu Chenggang, a senior researcher at Stanford University's Center for Chinese Economic and Institutional Studies, told the Financial Times that Beijing's pivot towards consumption in its economic policy suggests that officials recognize the economic situation is 'severe'. However, the Communist Party's top leadership remains uncertain about the specific measures needed to stimulate demand. 'When we look at these publicly announced policy measures... we still do not see how much they contribute to supporting domestic demand.' 'While they acknowledge some issues on one hand... they continue to place greater emphasis on the supply side.'
Jeremy Mark, a senior researcher at the Atlantic Council and an expert on Asian economic issues, remarked after reviewing the government spending plans from the Communist Party's two sessions that the unusual decision to publicly prioritize consumption in economic policy—especially for a 'party that typically relies on boasting for propaganda and is known for its arrogance'—suggests that there may be serious problems within the Chinese economy. From a policy standpoint, the support that the Communist Party authorities are willing to provide to the private sector is grossly inadequate, as these plans are unlikely to restore the household wealth lost due to the collapse of the real estate market or create job opportunities for millions of unemployed university graduates. This is particularly concerning given that, after several years of weak demand and falling prices, Chinese households and businesses are still struggling to make ends meet. Mark concluded: 'The government's publicly announced spending will not genuinely ignite the $18 trillion Chinese economy.'
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