Consumers to play bigger role in spurring growth

China's consumption, powered by a more proactive fiscal policy and a moderately loose monetary policy, will bring out greater vitality and play a bigger role in spurring overall economic growth this year, said officials and executives.

Consumer goods trade-in initiatives will serve a strong catalyst in boosting market sentiment and fueling consumer spending in the world's second-largest economy, in the face of escalating trade barriers and the tepid appetite in the property market, they added.

China has put scaling up domestic demand high on its policy agenda this year, with expanding consumption a top priority. Policymakers have fleshed out a set of specific measures to this end, Vice-Minister of Commerce Sheng Qiuping said at a news conference.

"Governmental stimulus is key to elevating consumer sentiment, and this significant support will be instrumental in upgrading consumption and driving high-quality development," said Jean-Paul Agon, chairman of L'Oreal Group.

In particular, the country's trade-in initiatives, which have contributed to a more than 1 percentage point increase in the annual growth of the country's total retail sales last year, will cover a wider range of consumer goods and offer more attractive incentives this year, Sheng said.

China is likely to double the funding for its consumer goods trade-in initiatives this year, reaching 300 billion yuan ($41.4 billion), said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

This move is forecast to lead to an additional 750 billion yuan in consumption in 2025, equivalent to a 1.5 percentage point acceleration in the growth rate of total retail sales of consumer goods, Wang added.

As of Thursday, the government has received 34,000 applications for car trade-ins so far this year, while 844,000 consumers have purchased more than 1 million home appliances under the initiative, data from the ministry showed.

Notably, some 7.92 million consumers have already applied for 10.79 million digital devices, since the trade-in program in this newly added category began on Monday, according to the ministry.

These consumption-boosting initiatives are off to a good start, as they align with the growing consumer desire for technological innovation, improved efficiency and enhanced aesthetics, Wang said.

In China's rapidly evolving consumer market, marked by a constant stream of new products and technologies, the key to success is not just the sheer volume of offerings, but rather the level of personalization, sophistication and relevance that companies can bring to the table, said Victor Leal Negre, senior vice-president of Greater China Grooming at Procter & Gamble.

"Each year, we feel the evolving consumption demands of Chinese consumers, which translates into our product innovations, allowing us to serve consumers more effectively," Negre said.

Looking ahead to this year, China will continue to expand high-level opening-up, particularly in the services sector, which will further strengthen its role in stabilizing growth, employment and household incomes, Zhu said.

Meanwhile, the government can offer more policy support to help localities purchase existing housing stock for affordable and rental housing purposes, which will also address the financing difficulties faced by real estate developers, Zhu added.

With the gradual stabilization of the real estate market and the deepening implementation of government policies to stimulate consumption, consumer confidence is expected to rebound substantially in the next 12 to 18 months, global management consultancy McKinsey & Company said in a report in October.