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China is considering including services in a multibillion-dollar subsidy programme to stimulate consumption, according to officials and academics, as the world’s second-largest economy struggles to boost chronically weak domestic demand.
The programme, which would seek to spur purchases of services in sectors such as travel, tourism and sports, could be launched in the second half of this year if consumption continues to lag behind expectations, said one official familiar with the matter.
It would come in addition to an existing “trade-in” programme for goods such as mobile phones or cars.
“There is a serious discussion” about a services subsidy programme, said the official familiar with the matter. They added that if consumption was not as strong as expected in the first half of 2025, it was “highly likely” services would be included in the trade-in programme.
The officials and academics did not offer a figure for the expected size of the programme, but China this month pledged to double funding for the consumer goods trade-in scheme this year to Rmb300bn ($41bn).
Economists have for decades called for China to rebalance its economy to encourage more domestic demand, a need that has become even more acute following the onset of a deep property sector slowdown four years ago.
About 80 global chief executives are visiting Beijing this week for an annual business forum and potential meeting with President Xi Jinping, where they are expected to raise China’s heavy reliance on exports and investment, rather than consumption and services, for growth.
China’s trade surplus hit a record of almost $1tn last year, and deflationary pressures have supercharged the competitiveness of its goods, leading to worsening trade tensions with the US and the EU as well as with large developing countries.
Beijing has tried to boost domestic consumption in recent years with trade-in schemes, but economists have criticised the programmes as mostly helping producers to sell goods, rather than increasing consumers’ spending power, and therefore failing to rebalance the economy.
“The persistent concern about this programme has been that it’s just pulling forward demand, not jump-starting sustainably higher consumption,” said Chris Beddor, deputy China research director at Gavekal.
The IMF has described China’s services sector as “underutilised”, noting it accounted for 50 per cent of value added to the economy last year, compared with about 75 per cent for advanced countries.
One Chinese academic familiar with the matter said policymakers in Beijing had reacted positively to proposals to include services in the consumption subsidy programme.
“They said they would consider it,” said the academic, who declined to be identified because he was not authorised to comment publicly on official policy.
Some local governments had already introduced consumption subsidies for cultural and tourism activities, but there is no such programme on a national level, the academic said. But decision-making was likely to be slow and the introduction of any scheme would be gradual, they added.
China’s finance ministry did not respond to a request for comment on the subsidies programme.
Beijing has in recent months pivoted to a more consumption-oriented stance. Premier Li Qiang, China’s second-ranking official, emphasised domestic demand at the annual meeting of the country’s rubber-stamp parliament this month.
The government has also released a blueprint for raising consumption, which included initiatives ranging from a subsidy system for childcare to introducing spring breaks for schools.
Consumption was expected to be a topic of debate among the chief executives gathered in Beijing this week for the annual China Development Forum, which concluded on Monday.
But in one sign that consumption has yet to overtake Beijing’s focus on manufacturing, an agenda for the forum seen by the FT showed the meeting would kick off with sessions on “new quality productive forces” — a euphemism for high-tech production and supply chains.
“Boosting consumption” will be discussed at the end of the forum, in one session, according to the agenda.
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