In recent years, as China’s economy has been experiencing a downturn and social consumption has decreased, the authorities in Beijing unveiled the “Three-Year Action Plan for Optimizing Consumption Environment” in an attempt to expand domestic demand amid the escalating US-China trade war. The plan, released on the 19th, aims to significantly improve the consumption environment and support upgraded consumption by 2027. However, experts are skeptical, pointing out that the plan is not only ineffective but may also become a laughing stock.
The plan jointly issued by the State Administration for Market Regulation, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Commerce, and the Ministry of Culture and Tourism on February 17 outlines actions to enhance consumer supply quality, optimize consumer order, strengthen consumer rights protection, promote consumer environment governance, and guide consumer environment development with the goal of noticeably improving the national consumption environment by 2027.
Furthermore, the plan emphasizes the implementation of the “Manufacturing Excellence Quality Project,” assessing enterprise quality control capabilities to enhance the overall image of “Made in China.” It also aims to create more consumption scenarios, rectify market transaction environments, strengthen resolution of consumer disputes at the source, and crack down on illegal activities such as improper pricing, price fraud, commercial confusion, false advertising, among others.
The term “consumption downgrade” has become a popular phrase in China in recent years, reflecting people’s reluctance to spend due to economic downturns and decreasing incomes.
According to a report released by the Shanghai Institute of Comprehensive Living under Japan’s Hakuhodo Institute of Life and Living on January 22 this year, 80% of Chinese consumers believe they have fallen into a “consumption downgrade” situation. Social media posts related to consumption downgrading in China have seen a fivefold increase from 2023 to 2024. The report surveyed 3,000 respondents aged 20 to 59 residing in China.
The phenomenon of consumption downgrading has become more pronounced in recent times. For instance, in the tourism hub of Hainan Province, official data from January this year showed a 15.9% decrease in the number of shoppers visiting Hainan compared to 2023, dropping from 6.756 million to 5.683 million. Total spending on duty-free goods in the province in 2024 amounted to 30.94 billion yuan, a 29.3% decline from the previous year.
Professor Sun Guoxiang from the Department of International Affairs and Business at Nanhua University in Taiwan expressed to Dajiyuan that amidst the current economic challenges facing China, solely relying on “optimizing the consumption environment” is insufficient in enhancing consumption. The core issues affecting China’s economy are structural in nature.
He emphasized that China is currently facing multiple internal and external pressures, including internal challenges such as slowing economic growth, a real estate crisis, weak job markets, lack of business confidence, and consumption downgrading, as well as external threats such as potential tariff escalations by the US Trump administration, global “de-Chinafication” of industries, technology bans, and foreign capital withdrawals. In such an environment, the Chinese government’s proposal to “optimize the consumption environment” may address some market order issues but fails to tackle the deeper economic structural problems.
China expert Wang He stated that the main reasons for the consumption downturn are people either lacking the means to spend or choosing not to spend even if they have the resources. He highlighted that if people have no money to spend, the official “three-year action plan” cannot resolve the issue. While affordable and quality goods may stimulate some spending, the challenge lies in providing cost-effective products.
Regarding the official proposal to “rectify the improper consumer market order,” Wang He pointed out that issues like price gouging in tourist areas stem from a lack of ethics among industry professionals. Furthermore, longstanding problems such as food safety issues, which impact consumer behavior, have been neglected by the Chinese regulatory authorities for years and are now being treated as a political campaign. These issues ultimately result from the Communist Party’s long-term erosion of traditional values, leading many Chinese to disregard social morals.
Professor Zheng Zhengbing from the Department of Finance and Economics at Yunlin University of Science and Technology in Taiwan shared with Dajiyuan that in developed countries, consumption typically accounts for a high percentage of GDP, around 60% to 70%. However, in China, consumption still hovers around 40% of GDP. He noted that China’s economic situation in 2024 was worse than officially reported, and with impending tariffs from the Trump administration, the country is facing major economic challenges.
“In a poor economy where people’s wealth and incomes are declining, and their future outlook is pessimistic, even those who have savings are reluctant to spend, resulting in overall tightened consumption,” he said.
Regarding the Communist Party’s presented “Three-Year Action Plan for Consumption,” Zheng Zhengbing pointed out that China’s economic difficulties stem from Xi Jinping’s policies post his rise to power, as he viewed the growth of private enterprises as a threat to the Communist Party’s rule, leading to an expansion of state-owned enterprises at the expense of private businesses. Additionally, Xi Jinping’s actions towards Hong Kong and Taiwan have escalated geopolitical tensions. Given the grim overall situation in China, the government’s introduction of the “Three-Year Action Plan” to enhance the consumption environment is deemed detached from reality.
Zheng Zhengbing further explained that the targets set for 2027, such as improving consumption supply and order, do not address the core issues since an inactive economy requires increased employment and income for people to halt the decline in wealth.
He highlighted that over the past two to three decades, China has made strides in enhancing the consumption environment through initiatives like cashless transactions, online payments, and e-commerce platforms, leading to the emergence of companies like Alibaba, Tencent, and Meituan. Therefore, the problem does not lie in optimizing the consumption environment. The Chinese government’s policy measures do not align with the real issues and are laden with exaggerated goals, such as enhancing the overall image of “Made in China,” depicting a misguided approach and bureaucratic posturing.
He also mentioned Xi Jinping’s recent hosting of a private enterprise symposium, which included figures like Jack Ma and AI experts, as well as the latest proposal to improve the consumption environment. While these actions may have temporary promotional effects, they are likely to be deemed ineffective in the long run.
Zheng Zhengbing concluded that as long as China remains under a one-party system without fundamental changes, and with policies becoming increasingly restrictive, the economic environment will continue to deteriorate, resulting in shrinking incomes and wealth for the people, further fostering pessimistic future outlooks. Consequently, consumption, investment, and production will lag behind. Thus, the collective efforts of various Communist Party departments to promote the “optimization of the consumption environment” hold little efficacy and may merely turn into a farce.