China wants to get people spending

Summary

Marketplace Morning Report: China Wants to Get People Spending
Release Date: March 17, 2025

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1. China's Special Action Plan to Boost Domestic Spending

China is actively implementing a Special Action Plan aimed at mitigating the effects of U.S. trade tariffs and stimulating domestic consumption. This comprehensive strategy includes initiatives to increase household incomes and the establishment of a childcare subsidy scheme to encourage population growth.

Suranjana Tiwari from Singapore provided detailed insights into China's economic landscape:

"China's leaders have set a target of around 5% growth for 2025. Quite a tall order given all the challenges in the Chinese economy."
(00:37)

Despite positive indicators, several challenges loom large:

• Export Pressure: Ongoing U.S. trade tariffs have significantly pressured China’s export sector.
• Domestic Demand: Household consumption remains subdued, hindering overall economic momentum.
• Property Crisis: The lingering property sector woes continue to strain the economy.
• Employment Concerns: Recent data indicates a rise in urban joblessness, and factory activity has declined, potentially exacerbated by the Lunar New Year festivities.

To counter these issues, policymakers have prioritized expanding domestic demand, as highlighted during the recent annual parliament meeting. One notable measure includes the appliance trade-in scheme, allowing consumers to exchange old washing machines and dishwashers for newer models, thereby injecting liquidity into the economy.

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2. Financial Incentives to Encourage Larger Families

Addressing the challenges of a rapidly aging population, certain regions in China are introducing substantial financial incentives to encourage families to have more children.

In the city of Hohot, Inner Mongolia, the government is offering couples nearly US$14,000 for their third child and any subsequent children. This incentive is designed to alleviate demographic pressures and ensure a steady workforce for the future.

Mickey Bristow from the BBC elaborated on this initiative:

"This is about twice as much as the annual disposable income that people have in this particular place. So really a lot of money."
(02:55)

This significant financial support marks a dramatic shift from the one-child policy that was only lifted a decade ago, underscoring the government's commitment to reversing population decline trends.

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3. Market Reactions to Beijing's Stimulus Measures

China's proactive economic measures have had a tangible impact on Asian stock markets. Following the announcement of the spending plans:

• Hong Kong's Hang Seng rose by 0.8%
• South Korea's benchmark climbed 1.6%
• Malaysia’s stocks gained 1.1%

Additionally, gold prices are approaching the $3,000 per ounce milestone, having surged 14% since the start of the year amid uncertainties surrounding U.S. trade tariffs.

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4. Nissan's Advances in Self-Driving Technology

Shifting focus to the automotive sector, Nissan has completed the latest phase of an eight-year project dedicated to developing self-driving car technology. Despite facing setbacks such as job cuts and significant profit declines, Nissan remains optimistic about the future of autonomous vehicles.

Theo Leggett provided an on-the-ground report from the UK:

"We've got a variety of sensors on this car, cameras and we've got laser guidance systems and we've got a radar as well. And all of this helps to support the self-driving technology that we're trying to deliver in this car."
(03:42)

The project utilizes an electric Nissan Leaf equipped with advanced sensors and guidance systems, tested extensively on rural British roads with challenging conditions. Bob Bateman, the project leading engineer, emphasized the technical sophistication of the vehicle:

"Effectively the eyes and ears of the car to allow you to drive."
(04:15)

David Moss, Nissan's head of R&D for Europe, the Middle East, and Africa, discussed the broader vision:

"We're looking to provide technology that allows us to develop a mobility service. This means people who maybe can't drive or no longer want to drive, or don't even have access to public transport are able to actually move around."
(05:00)

While advancements are promising, experts like Professor David Bailey from Birmingham Business School caution that fully autonomous, door-to-door self-driving cars may still be a decade away:

"This is an important step forward, but we're not going to see, say, autonomous cars that can drive you anywhere probably until the back end of the next decade."
(05:46)

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5. Consumer Confidence and Personal Finance

In related economic news, consumer confidence has experienced its sharpest monthly decline since 2021. This downturn reflects widespread financial uncertainty, prompting individuals to take a more serious approach to personal finance management.

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This comprehensive overview highlights China's strategic efforts to bolster its economy through domestic spending and demographic incentives, the positive ripple effects on Asian markets, and significant strides in autonomous vehicle technology by Nissan. As China navigates these initiatives, the global economic landscape continues to evolve, underscored by shifting consumer sentiments and technological advancements.

Transcript

[Sarah Rogers]

China announces plans to get people spending as new data suggests domestic sales are on the up. Live from the UK this is the Marketplace Morning Report from the BBC World Service. I'm Sarah Rogers in for Liana Byrne. Good morning. China's leaders have announced what it's calling a special action plan to try and offset the impact of US Trade tariffs and boost domestic spending. Measures include plans to increase incomes and establish a child care subsidy scheme. The latest figures from the world's second largest economy indicate things are are picking up though from Singapore. Here's the BBC. Suranjana Tiwari, we had some data out.

[Suranjana Tiwari]

Today which include retail sales and they show that growth did quicken. Now, as you may know, China's leaders have set a target of around 5% growth for 2025. Quite a tall order given all the challenges in the Chinese economy. And analysts do say there is a lot of pressure on exports because of those tariffs. But also the household demand is down and also that protracted property crisis is still causing problems. There was some data that showed that joblessness has actually risen, especially urban joblessness, and factory activity was down, perhaps because of the lunar new year compared to the previous quarter. So still some strains on the economy. Policymakers have put expanding domestic demand as a top priority this year. Now, they recently held the annual parliament meeting. Again, boosting consumption was top priority there as well. And they expanded one scheme that's been quite successful so far, where people can trade in things like washing machines and dishwashers for newer ones to try and pump up the economy a little bit.

[Sarah Rogers]

Saranjana Tawari, Sticking with China, a city in the north of the country is offering families with two children massive financial incentives to have a third over concerns about the country's rapidly aging population. It's a huge swing from the severe one child policy which was lifted a decade ago. The BBC's Mickey Bristow has the details.

[Mickey Bristow]

For the last couple of years, the central government has been trying to persuade local governments across China to provide incentives for people to have more children. China's got 1.4 billion people, but it's aging rapidly. And the government believes there simply aren't enough young people to pay for the ever growing number of pensioners. So across the country there's a patchwork of incentives. This particular incentive is in the city of Hohot in Inner Mongolia. That's a northern region of China. And they're offering couples nearly US$14,000 for their third child and any other children that they have. This money will be paid over 10 years and just to give you an idea of exactly how much money this is. It's about twice as much as the annual disposable income that people have in this particular place. So really a lot of money.

[Sarah Rogers]

The BBC's Mickey Bristow. Okay, let's see the numbers. Asia stocks are up following Beijing's spending measure announcements. Hong Kong's Hang Seng was up almost 0.8% while South Korea's benchmark climbed 1.6% and Malaysia stocks gained 1.1%. And gold prices are just short of its $3,000 per ounce milestone. Prices are up 14% since the start of the year following uncertainty over US trade tariffs. Japanese carmaker Nissan has finished the latest stage of an eight year project to develop technology for self driving cars. It's been a tumultu time for the company which announced job cuts and a huge drop in profits. But it's hoped the new tech being tested in the UK will help develop driverless taxis. BBC's Theo Leggett has been for a ride.

[Theo Leggett]

So Brendan has set the route for the vehicle. So I'm just turning the ad system on and then activating it. The car is an electric Nissan Leaf. It's been developed by a consortium including Nissan, other private firms, research groups and government agencies. And it is being tried out on the narrow roads, potholes and blind bends that are so familiar in rural Britain. So this section is one of the long, sweeping, dynamic roads which really gets to showcase the car's ability. It is actually going quite fast. The project has been going for eight years. The test cars have covered 16,000 miles. They've learned to cope with motorways. They've been tried on some of London's busiest streets, where they've even used roadside cameras to pick out hazards well in advance. And most recently, they've been pounding along rural roads. Back in the workshop, the engineer leading the project, Bob Bateman, tells me how it all works. We've got a variety of sensors on this car, cameras and we've got laser guidance systems and we've got a radar as well. And all of this helps to support the self driving technology that we're trying to deliver in this car. Effectively the eyes and ears of the car to allow you to drive. It's certainly impressive though. Travelling at 60mph on bumpy roads in what amounts to a mobile computer is a little disconcerting at first. But what exactly is the point of it all? David Moss is Nissan's head of research and development in Europe, the Middle east and Africa. What we're looking to do is to provide technology that allows us to develop a mobility service. This means people who maybe can't drive or no longer want to drive, or don't even have access to public transport are able to actually move around. Driverless taxis are already a reality in some parts of the world, in cities in the United States and China, for example. But they can only operate in carefully defined areas. And their performance hasn't always been flawless, as this man who ended up trapped doing circuits of a car park in Phoenix, Arizona found out.

[Sarah Rogers]

Okay, why is this happening to me on a Monday?

[Theo Leggett]

I'm in a Waymo car. This call may be recorded for quality assurance. This car is just going in circles. Meanwhile, door to door, self driving for private motorists remains a long way off. According to Professor David Bailey of Birmingham Business School. This is an important step forward, but we're not going to see, say, autonomous cars that can drive you anywhere probably until the back end of the next decade. So that's still some way away. True, self driving cars were once seen as science fiction.

[Sarah Rogers]

You press a destination button on a.

[Theo Leggett]

Dashboard route map and electronic controls take over. There is still a long way to go, but engineers insist they're now firmly on track to turn futuristic fantasy into day to day reality. In London, I'm the BBC's Theo Leggett.

[Sarah Rogers]

For Marketplace in the UK, I'm Sarah Rogers with the Marketplace morning reports from the BBC World Service.

[Janelia Espinal]

Consumer confidence had its sharpest monthly decline since 2021, which means we're all in our feels about money. And while uncertainty is the only constant these days, it's also a great reason to get serious about understanding personal finance. I'm Janelia Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers, dealing with money and friendship and love, entrepreneurship and student loans. Get serious about your money and build a life you've always dreamed of. Listen to Financially Inclined wherever you get your podcasts.