China is turning the tables on consumption.
With the goal of transforming them into the engine of the economy, the government launched a plan that prioritizes consumers and increases income so they can spend more — and better.
By Fernando Capotondo - Transforming consumption into one of the engines of economic growth by 2025, shifting the focus from supply to demand—that is, to consumers—and creating mechanisms that guarantee an improvement in family income—in other words, purchasing power—appear to be the three pillars of the new Special Initiatives to Boost Consumption Plan (PIEIC), which Chinese economic authorities have put into practice in recent days.
To achieve these goals, the multifaceted plan combines policies to increase wages and minimum incomes with reductions in financial burdens, expansion of subsidies, consumption vouchers, targeted discounts, renewal of durable goods, and economic assistance for childcare and eldercare, among other measures.
In fact, one of the distinguishing features of the PIEIC is that, by linking spending and purchases to broader social and development goals, it positions consumption not only as a strictly economic issue, but as an instrument to improve the quality of life of China's 1,4 billion citizens.
Measures pointing in the same direction include increasing basic pensions, prohibiting the illegal extension of working hours, guaranteeing comprehensive basic health insurance, and encouraging banks to expand the supply of consumer credit—all actions that complement the PIEIC (National Program for Economic and Social Integration).
“Buy Now” could be the slogan on social media that summarizes the spirit of the plan, which by December will allocate 300 billion yuan (about US$41,5 billion) to replace old models of refrigerators, televisions, cell phones and other consumer goods.
“The renovation plan is more than just an economic policy,” said Commerce Minister Wang Wentao, highlighting that while the measure has revitalized several productive sectors since its inception in 2024, its main contribution has been improving the quality of life for hundreds of millions of families.
“The main problem limiting the consumption of goods is the ability to spend; while for the consumption of services, the biggest challenge is the lack of a high-quality supply,” Wang acknowledged during the Two Sessions held this month in Beijing — a true indication of the main challenges facing the PIEIC.
Nothing new under the sun
It is important to remember that encouraging consumption is not a new idea in the political toolbox of the People's Republic of China. In 2024, consumption accounted for 44,5% of the country's economic growth, surpassing the investment and export sectors and boosting GDP by 2,2 percentage points.
However, the momentum observed in 2025 appears to carry even more weight, considering the context of a virtual trade war with the United States and the headwinds stemming from protectionist measures adopted by several Western economies.
“Expanding domestic demand by stimulating consumption can neutralize external uncertainties, stabilize growth in the short term, and promote structural changes over time,” analyzed Yang Decai, policy advisor and professor of economics at Nanjing University.
Chinese-style consumption
In this context, China's Ministry of Commerce (MOFCOM) announced this week a new package of measures aimed at digital consumption, driven by technologies such as artificial intelligence (AI), virtual reality, and other cutting-edge innovations.
Official data revealed that retail consumption of services grew 4,9% in the first two months of 2025, exceeding the increase in sales of goods by one percentage point. Meanwhile, online retail sales rose 7,3%, confirming the high demand for digital products and services, according to [source missing]. Global Times.
More than 42 million consumers have taken advantage of MOFCOM's new subsidy program (up to 500 yuan, or about US$70 per person) to purchase the latest mobile phone models—now with AI features. Since its launch on January 20, sales have already totaled 66,95 billion yuan (about US$9,3 billion), including other electronic devices.
Those who purchased smartphones, smartwatches, fitness trackers, or tablets costing up to 6.000 yuan (about US$826) per unit received a subsidy of 15% of the value, capped at 500 yuan (US$68) per item.
In less than three months, more than 2 million electric bicycles were sold under the consumer goods replacement program, with subsidy applications exceeding 1,2 billion yuan (US$165 million) and generating revenues of 5,61 billion yuan (about US$783 million), according to the Ministry of Commerce.
Meanwhile, sales of new energy vehicles, which are subsidized by up to 15.000 yuan (US$2.000), reached 686 units in February — an increase of almost 80% compared to the same month in 2024.
Interesting fact: major Chinese cities have vehicle quotas to combat traffic and pollution. But, to stimulate consumption, Beijing took the lead and announced the release of 100 new licenses.
Critical transition
"The dynamism observed in China's consumer market demonstrates the enormous potential of the country's internal economic circulation," said Premier Li Qiang at the opening of the China Development Forum 2025, held last week in Beijing.
Han Weinxiu, vice-director of the Central Economic and Financial Affairs Commission, stated that improving the population's purchasing power goes beyond simply promoting economic growth and productivity. According to him, the initiatives also aim to increase the income of urban and rural families, optimize income distribution, and raise the share of household income in total national income.
But the most forceful point came from Liu Shijin, deputy director of the State Council's Research Center for Development, when he stated:
"China is facing a critical transition, moving from a growth model driven by investment and exports to one based on innovation and consumption."
“Although structural imbalances in consumption represent major challenges, resolving them could unlock growth potential comparable to that once provided by the real estate sector. This transformation would be the basis for sustainable economic growth at a moderate pace, ensuring the stability of the Chinese economy in the coming years,” Liu concluded.
Weeks earlier, Li Qiang himself had anticipated that boosting consumption would be one of the central goals for 2025. Proof of this, albeit symbolic, is that in his annual government report, he mentioned the word "consumption" 27 times—the highest number in a decade.
From a distance, with quite distinct political realities, many may identify with a consumption plan that understands the economy as an extension of the social sphere, guaranteeing salary and pension increases that, in other administrations, are cut with chainsaws — or with equally radical ideas.
It may seem like a utopia, a dream of redistributive justice, or a socialist delusion, but the fact is that China has changed the rules of the world's largest consumer market. And this is definitely not some Chinese fairy tale.
