China presents plan to increase consumption despite Trump-Zöllen

China presents plan to increase consumption despite Trump-Zöllen

China has announced a comprehensive “special action plan” to promote internal consumption in order to counteract the economic effects of the tariffs imposed by US President Donald Trump.

Details of the action plan

The initiative, which was announced by the official news agency Xinhua on Sunday, is ambitious, but there are no concrete details. The plan includes measures to increase the income of the population, the introduction of a child benefit system and an expansion of the "cash-for clunker" program that supports the exchange of old goods such as cars and electronics.

growth goals and challenges

The plan is based on the promise of Premier Li Qiang, during a significant political session at the beginning of this month that the "large ship of the Chinese economy" will "sail stable in the future". Li had set an ambitious growth goal of "around 5%" for this year, which can only be reached by increasing the expenditure to ensure that China is not dependent on exports in order to stimulate its extensive but slowly growing economy.

consumer confidence remains weak

At a press conference on Monday, when questions about the plan were answered, Li Chunlin, deputy director of the National Development and Reform Commission, the Supreme Planning Authority, admitted that consumer trust was still weak. "There is still a lot to do to increase consumption, to expand the domestic demand and to better meet people's needs for a better life," he said.

economic problems and international tensions

china also faces economic problems, such as an uncertain employment view and a continuing decline in the real estate sector. Internationally, the country is also put under pressure because the United States acts harder in the trade war.

reactions to customs increases

Trump doubled the tariffs to all Chinese imports to 20% from this month. In response to this, China announced a new round of retaliatory tariffs that also affect US agricultural imports and have been in force since last week.

Current economic data

Monday published official figures from the National Bureau of Statistics (NBS) showed that retail sales, a measure of consumption, rose by 4.0% in the period from January to February. This was a little faster than the increase of 3.7% in December and met the expectations of a group of economists who were interviewed by Reuters.

"The Chinese economy has put a solid start into the year, which was probably driven by fiscal incentives," wrote Zichun Huang, an economist from Capital Economics, in a research note on Monday. "We expect the recovery to continue in the coming months, but in view of the larger headwear that press China's economy, we do not expect that a short -term improvement will be."

deflation and their effects

The country has to fight with a persistent problem of Deflation People expect prices to continue to fall in the future. This usually leads to a decline in consumption, which is an important part of economic growth.

price development and industrial production

Last week that the consumer price index (VPI), a measure of measuring inflation, fell by 0.7% in February compared to the previous year. This has been the lowest level of index for more than a year.

As far as industrial production is concerned, the NBS reported on Monday that it increased by 5.9% in the first two months of the year, which is easily above the estimates of Reuters of an increase of 5.3%. The NBS publishes data for the combined months of January and February to take into account the effects of the New Year's festival that can begin in both months.

For reporting, CNN reporter Hassan Tayir at.