China is implementing various measures to encourage consumer spending and revive its sluggish economy. The government has announced childcare subsidies, wage increases, and paid leave, alongside a $41 billion discount program covering items like home appliances, electric vehicles, and smartwatches.

Retail sales saw a 4% increase in early 2025, but falling home prices and deflation remain concerns. Unlike other economies struggling with inflation, China has faced deflation for the past two years, leading to lower prices but also weaker economic growth. A decline in household spending has slowed business revenue, hiring, and wage growth.

To counter these challenges, China’s leadership, under President Xi Jinping, has prioritized boosting domestic consumption. The government has introduced social welfare initiatives, though many experts believe further action is needed. The property market downturn has made consumers more cautious, contributing to high savings rates.

With Chinese households saving 32% of their disposable income in 2024—one of the highest global rates—Beijing is working to shift this trend. While domestic consumption typically drives 80% of growth in the US and UK, China’s share has remained around 50-55%, a gap the government is now trying to close through economic stimulus efforts.