SHANGHAI — China’s State Council has just announced new measures designed to encourage domestic consumption and bolster economic growth.
It’s the first time the council has released policy specifically targeting consumer services, which it hopes to boost by expanding consumer credit, improving China’s already fast-developing online payment options and managing credit card fees. The government unveiled the new measures over the weekend.
Though credit cards have been slow to take off in China, given a cultural preference for saving a large portion of household income, Millennial consumers have proven more open to credit than their predecessors and the industry here is growing quickly as a result.
In fact, credit card debt hit a record high of 2.55 trillion yuan (about $411.1 billion) in the first quarter this year, according to a report from the People’s Bank of China, representing year-on-year growth of 35.5 percent.
Another aspect of consumption targeted by the new policies is spending by China’s rural population.
According the statistics from the World Bank, rural residents made up 46 percent of the country’s population in 2014. Though that number is dropping each year as the government pushes rapid urbanization, almost half of the population of the world’s most populous country represents a significant number of consumers currently being underserved.
Further expansion of e-commerce and its related infrastructure was one of the ways the State Council identified to reach more rural consumers.
A zero-tolerance policy on price gouging, prosecuting monopolies and unfair business practices, as well as a crackdown on counterfeit products was also cited as part of the government’s consumer-focused agenda.
The new policies from the State Council come at a time when China is counting on domestic consumption to prop up growth. The economy expanded 6.9 percent year-on-year in the first three-quarters of 2015, the lowest rate of growth since the second quarter of 2009.