Childcare and more paid leave: Will China's new plan to boost spending work?

## Summary
Childcare and more paid leave: Will China's new plan to boost spending work? 42 minutes ago Share Save Suranjana Tewari Asia Business Correspondent Share Save NurPhoto via Getty Images China's leaders are trying something new to revive the country's slowing economy: encouraging people to spend more. Now policymakers are placing more emphasis on raising household incomes and strengthening consumption. "It's a recognition by Beijing that the old growth model no longer works," said Dexter Roberts of the Atlantic Council's Global China Hub. The question now is whether China's leaders can persuade households to open their wallets - and whether consumption can realistically become an engine of growth. China's leaders have historically been cautious about providing large-scale support to households, wary that stimulus could increase already high debt levels. "The narrative of a shift toward consumption-led growth is stronger than the policies currently supporting it, at least in the short to medium term," said Gerard DiPippo of the RAND China Research Center in his assessment of the announcements.

## Article Content
Childcare and more paid leave: Will China's new plan to boost spending work?
42 minutes ago
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Suranjana Tewari
Asia Business Correspondent
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NurPhoto via Getty Images
China's leaders are trying something new to revive the country's slowing economy: encouraging people to spend more.
At this year's Two Sessions in Beijing - the country's most important political meeting of the year - officials set an annual growth target of 4.5%–5%, the lowest since 1991.
Alongside the goal, policymakers unveiled measures aimed at boosting household spending - a tacit admission that the old drivers of growth may no longer be sustainable.
In many ways, it marks a reversal of China's traditional approach.
In the past, when growth slowed, Beijing built more apartments, motorways, factories and industrial parks - fuelling expansion through state investment, exports and a booming property market.
Now policymakers are placing more emphasis on raising household incomes and strengthening consumption.
"It's a recognition by Beijing that the old growth model no longer works," said Dexter Roberts of the Atlantic Council's Global China Hub.
The question now is whether China's leaders can persuade households to open their wallets - and whether consumption can realistically become an engine of growth.
Spend, spend, spend
The measures announced include expanding services for the elderly, enforcing paid annual leave and more support for families raising children.
Policymakers have also proposed an "urban-rural resident income growth plan" aimed at putting more money into the hands of people and narrowing income gaps.
Officials describe this approach as "investing in people" - the idea that households are more likely to spend if they feel secure about growing their family and covering healthcare and retirement costs.
China sets lowest economic growth target since 1991
What to know about the 'two sessions', China's biggest political meeting
China's leadership is still doubling down on advanced manufacturing and technology in the upcoming 15th Five-Year Plan, aiming to embed artificial intelligence (AI) across the economy and strengthen industrial capabilities.
But relying on exports alone may not provide a sustainable engine for growth as protectionism rises globally and demand for its goods weakens.
"The task of transitioning to new growth drivers is formidable," Premier Li Qiang said in the government work report, warning that "the imbalance between strong supply and weak demand is acute."
But can these social policies significantly change consumer behaviour?
Why spending remains weak
Chinese households already spend a smaller share of their income than people in most major economies.
Household consumption accounts for about 40% of gross domestic product (GDP), compared with a global average of roughly 55% and about 60% in advanced economies.
Recent data suggests government stimulus can encourage spending, but confidence remains fragile.
During the Spring Festival holiday, authorities distributed billions of yuan in vouchers to encourage people to spend on transport and entertainment.
Travel revenue for the period rose by about 19% compared with the previous year.
But average spending per traveller declined and cinema box office takings fell sharply, suggesting households remain selective about parting with money.
China's leaders have historically been cautious about providing large-scale support to households, wary that stimulus could increase already high debt levels.
"The narrative of a shift toward consumption-led growth is stronger than the policies currently supporting it, at least in the short to medium term," said Gerard DiPippo of the RAND China Research Center in his assessment of the announcements.
Getty Images
Xi Jinping has been eluding to "investing in people" in recent months
Some of the government's proposals have also triggered scepticism online.
On the social media platform Weibo, some users questioned the motive for encouraging paid leave.
"This is not to let you rest, it's to make you spend money," one user wrote, while another argued authorities should first enforce an eight-hour workday and a five-day week.
Debates around marriage and parental leave have also drawn strong reactions. Some users called for a nationwide minimum of 10 days' marriage leave - in some provinces, couples only get three days - while others pointed to the high cost of raising children.
"Young people need stable jobs and incomes, and appropriate rest," one person wrote. "Then we can talk about marriage and having a kid."
But the challenges facing China's consumer economy run far deeper.
A new playbook?
One reason consumption remains weak is the prolonged downturn in the property market.
Real estate once accounted for as much as a quarter of China's economic activity when related industries are included.
But the industry has been in crisis for several years after a debt crackdown on developers triggered a wave of defaults and st

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## Expert Analysis

### Merits
- At this year's Two Sessions in Beijing - the country's most important political meeting of the year - officials set an annual growth target of 4.5%–5%, the lowest since 1991.
- But relying on exports alone may not provide a sustainable engine for growth as protectionism rises globally and demand for its goods weakens. "The task of transitioning to new growth drivers is formidable," Premier Li Qiang said in the government work report, warning that "the imbalance between strong supply and weak demand is acute." But can these social policies significantly change consumer behaviour?
- Debates around marriage and parental leave have also drawn strong reactions.

### Areas for Consideration
- With property prices now stagnant or falling, that wealth effect has reversed. "China's consumption challenge is largely about replacing the massive housing-investment demand engine," DiPippo said.

### Implications
- Childcare and more paid leave: Will China's new plan to boost spending work? 42 minutes ago Share Save Suranjana Tewari Asia Business Correspondent Share Save NurPhoto via Getty Images China's leaders are trying something new to revive the country's slowing economy: encouraging people to spend more.
- Alongside the goal, policymakers unveiled measures aimed at boosting household spending - a tacit admission that the old drivers of growth may no longer be sustainable.
- But relying on exports alone may not provide a sustainable engine for growth as protectionism rises globally and demand for its goods weakens. "The task of transitioning to new growth drivers is formidable," Premier Li Qiang said in the government work report, warning that "the imbalance between strong supply and weak demand is acute." But can these social policies significantly change consumer behaviour?
- China's leaders have historically been cautious about providing large-scale support to households, wary that stimulus could increase already high debt levels. "The narrative of a shift toward consumption-led growth is stronger than the policies currently supporting it, at least in the short to medium term," said Gerard DiPippo of the RAND China Research Center in his assessment of the announcements.

### Expert Commentary
This article covers china, growth, spend topics. Notable strengths include discussion of china. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1052.