China’s consumption drive falls on deaf ears as consumers remain cautious, ask for more

by Luna Sun at scmp.com

An elusive solution to China’s weak consumption has been weighing on policymakers as Beijing banks on increased spending for future economic growth amid subdued external demand.

Despite a raft of policies and pledges, Chinese consumers, haunted by cloudy economic prospects and reduced income, remain reluctant to spend unless there are obvious benefits.

The State Council released a 20-point directive at the weekend, vowing to increase support for nursing care, consider an extension of visa-free entries for more countries and encourage “low-altitude tourism” to spur spending on services, a sector that is growing faster than goods.
 
 
China has also allocated around 300 billion yuan (US$42 billion) worth of ultra-long-term special government bonds to support industrial-equipment upgrades and a consumer goods trade-in programme – a programme analysts argue would play a crucial role in stabilising China’s economy in the second half of the year.
 

However, consumers who are growing increasingly cautious about spending their hard-earned money, remain unimpressed.