Shifting Focus: Time to Ignite Demand After Supply Side Initiatives

I’m excited to share some insightful developments reported by Xinhua News Agency! Recently, the General Office of the CPC Central Committee and the General Office of the State Council have unveiled a dynamic initiative known as the "Special Action Plan to Boost Consumption." This remarkable plan outlines 30 significant tasks to invigorate the economy across eight vital areas. These include promoting reasonable growth in wage income, enhancing employment opportunities for key groups, broadening channels for property income, increasing support for families through childbirth and child-rearing, and reinforcing the enforcement of paid annual leave systems.

Last week, I had the pleasure of releasing a report on China's strategic approach to accelerating economic growth. While technology plays a crucial role, the Chinese government is equally committed to stimulating consumption. There are ongoing discussions about how “China is still dependent on supply but needs to strengthen demand

With this consumer-focused policy in motion, we are optimistic about the improving sentiment among Chinese consumers. Here are some key takeaways from the new policy for those who may not have access to the Chinese news outlets:

1. **Stabilizing Financial Markets**: The plan introduces various measures to stabilize the stock market, enhance strategic reserves, and strengthen market stabilization mechanisms. A focus will be placed on accelerating the flow of medium- and long-term funds, including those from commercial insurance, national social security, pension insurance, and enterprise annuity funds. There is a renewed emphasis on better market management for central and state-owned enterprises and a serious commitment to combating financial fraud in the capital market.

2. **Childcare Support Initiatives**: This exciting plan includes the establishment of a childcare subsidy system. It encourages local regions to provide maternity insurance that covers flexible employment personnel, migrant workers, and new employees, ensuring that more families have the support they need.

3. **Consumer Goods Trade-in Support**: Another encouraging aspect is the push to enhance support for consumer goods trade-ins. The policy aims to mobilize funds from ultra-long-term special treasury bonds to help local governments promote the trade-in of consumer goods, facilitate green upgrades for major appliances, and provide subsidies for new digital products like mobile phones, tablets, and smartwatches.

4. **Real Estate Market Stabilization**: The plan also seeks to stabilize the real estate market by promoting the renovation of urban villages and dilapidated houses. It aims to tap into the existing and improved housing demand. There are provisions for special bonds to assist city governments in acquiring existing commercial housing for affordable options, alongside tax policies aimed at fostering the healthy development of the housing market.

Overall, the outlook for the Asian market appears incredibly promising. As consumer demand begins to flourish, we can anticipate numerous positive outcomes, especially with the ongoing support from the Chinese government on the supply side through technology and initiatives like the Belt and Road Initiative.

Several sectors stand to reap the rewards from this proactive approach, including nickel (linked to real estate), various commodities (notably within the food sector), and the industrial estate in Indonesia, which is poised to benefit from the supply-side interventions and infrastructure development associated with the Belt and Road Initiative.