Senior economic policy advisor pushes for subsidizing service consumption
On Thursday, Caixin published an interview with Huang Hanquan on China’s strategy for managing the US trade war.
Huang is worth paying attention to:
- He heads the Academy of Macroeconomic Research, which advises the macro planner (NDRC).
- In October, he briefed Premier Li Qiang and the vice premiers on coordinating policies to support growth.
In the interview, Huang emphasized the need to stimulate domestic consumption to cushion the impact of trade shocks, urging the government to expand subsidies in two main directions:
- Targeted goods and services, including equipment for the elderly (like health monitors and wheelchairs) and services such as tourism, film and entertainment, domestic help, and education and tutoring services
- Support for low-income households, including vouchers for essentials like food and daily necessities
To fund these measures, Huang proposes issuing more ultra-long-term special treasury bonds, beyond the RMB 1.3 trillion already allocated for 2025.
Get smart: With demand for subsidized durable goods like electronics and appliances expected to wane, the government is likely to shift toward subsidizing service consumption, which tends to be recurring and thus more sustainable.
The bigger picture: With local financial resources tight, the central government is ready to step up.
- But the government will calibrate support based on its perception of economic weakness.
- For now, the economy's stronger-than-expected resilience has given policymakers some breathing room.