China to Promote Household Income Growth in 2025

BEIJING (Reuters) – China will promote stable growth in household income in 2025 by increasing direct fiscal support to consumers and enhancing social security, according to the state-run Xinhua news agency on Monday.

China has identified expanding domestic demand as a key objective to stimulate growth for next year, particularly as significant weaknesses in the crisis-hit property sector continue to hinder a full-scale recovery.

To enhance consumption, China plans to "greatly increase" funds from ultra-long special bonds to support industrial upgrades and a consumer goods trade-in scheme next year, Xinhua reported, citing a Central Financial and Economic Affairs Commission official.

The initiatives will focus on boosting household income through increased fiscal spending on consumption, improved social security, job creation, wage growth mechanisms, higher pensions for retirees, better medical insurance subsidies, and incentives to promote childbirth, according to Xinhua.

Policymakers are considering including more products in high demand and with potential for replacement in the scheme, which has reportedly had a "very good" impact this year. However, details on the size of 2025 funding and the specific products to be included were not disclosed.

This year, 150 billion yuan ($20.60 billion) has been allocated from such bonds to support consumer goods, including trade-ins for fridges and TVs, with total sales revenue driven by the scheme exceeding 1 trillion yuan thus far.

An unidentified official told Xinhua that, based on the current economic situation, annual economic growth is expected to be around 5%.

The official expressed optimism for further stabilization in the housing market and urged for timely policy measures that can directly support the real estate sector. Local governments are encouraged to have more autonomy in buying housing stock.

Recent official data showed that home prices declined at the slowest rate in 17 months in November, attributed to government efforts to rejuvenate the sector.

Xinhua emphasized that investment remains a crucial part of domestic demand, highlighting significant opportunities for improvement in investment efficiency and targeting.

($1=7.2816 Chinese yuan renminbi)