China decided to increase non-financial stimulation of domestic demand

The National Development and Reform Commission, China’s leading economic planning agency, issued a document on July 31 that approved directions for stimulating domestic demand. The document, implementing the decisions of the State Council of the People’s Republic of China dated July 28, is aimed at lifting a number of state restrictions, expanding paid holidays, confirming benefits for buyers of electric vehicles, improving infrastructure and holding mass consumer events. At the same time, the PRC authorities refrain from direct financial support for consumers and companies.

The document proposes to separately stimulate “mass consumption”, “consumption of services”, “rural consumption” and “expansion of new types of consumption”. In particular, it is planned to focus on vehicles with an internal combustion engine (ICE). It was decided to optimize or pause restrictions on the purchase of cars with internal combustion engines in the country, to promote “the complete abolition of restrictions on the movement of used cars and facilitate the processing of transactions” with them. Local authorities have been instructed to expand parking lots in cities and tourist areas, develop electric vehicle charging infrastructure, including the village, and optimize tax incentives for the purchase of new vehicles. At the same time, incentives for the purchase of electric vehicles in China are regularly extended, and at the end of June 2023, it was decided to allocate $72 billion from the budget for them until 2027.