(Yicai) March 5 -- China will continue to take steps to boost consumption, improve investment efficiency, and expand domestic demand as its main economic priorities for this year, Premier Li Qiang said in the government work report delivered to the nation’s parliament today.

The annual report to the National People’s Congress proposes supporting income growth through multiple channels, particularly focusing on raising those of low- and middle-income groups and improving the mechanism for salary increases.

In addition, CNY300 billion (USD41.3 billion) of ultra-long-term special treasury bonds will be issued to support ongoing trade-in programs for old consumer goods, it said.

In light of higher US import tariffs and “strong supply and weak demand” in China’s own economy, boosting consumption has become the key to unblocking the economic cycle and steadying the economy, said Wu Chaoming, chief economist at Chasing Financial Holdings.

Driven by trade-in programs and a range of other economic stimulus measures, consumption contributed 45 percent of China’s economic growth last year, boosting the country’s gross domestic product by 2.2 percentage points. Notably, consumption on services per head rose 7.4 percent to CNY13,016 (USD1,792) from 2023. 

While China continues to promote mass consumption, there is an increasing emphasis on the consumption of services, which is a major shift from away from past priorities, said Zeng Gang, director of the Institute of Urban Development at East China Normal University.

And overall consumption is better than what the data show, as spending by foreign tourists and spending on services do not appear in official statistics, an industry insider pointed out. As the economy develops, rapid growth in expenditure on services compared with goods is inevitable, they added.

China needs to update its methodology for gauging consumption to more accurately guide measures for boost consumer spending, the person added.

Editor: Futura Costaglione