Chinese government plans major financial support to boost consumption

On June 25, 2025, a significant announcement by six Chinese government agencies marked a pivotal moment for the economy. The agencies, including the People's Bank of China and the National Development & Reform Commission, revealed the 'Guiding Opinions on Financial Support to Boost and Expand Consumption,' responding to concerns about domestic demand growth. This initiative aims to enhance consumption capacity through financial instruments, reinforcing the domestic market amidst the current global economic climate. The measures include encouraging individual pensions, increasing funding for key consumption sectors, improving financial services, and ensuring organizational support. The backdrop of this announcement included a positive sentiment in Asian equity markets, particularly in Hong Kong and Mainland China, where investors responded favorably to signals of de-escalation in the Middle East and potential U.S. interest rate cuts. As the proposals seek to stimulate consumer demand, there has been a notable uptick in investments, with Mainland investors purchasing $1.22 billion worth of Hong Kong-listed stocks, indicating growing domestic engagement despite limited foreign interest. Financial stocks thrived, particularly in brokerage and insurance sectors, signaling optimism. In his remarks at the Summer Davos event in Tianjin, Premier Li emphasized China's sustainable position as a consumption powerhouse, echoing a previously established narrative about the nation's consumer market’s potential. The ambitious reforms aim not only to address current economic challenges but also to catalyze long-term growth by instilling confidence in both investors and consumers. With military stocks also performing well amid plans for a military parade to commemorate the end of World War II, optimism prevails across multiple sectors. The forthcoming press conference by the National Development & Reform Commission is anticipated to provide further insight into the implementation details of these measures, painting a clearer picture of how China intends to navigate its path toward economic recovery and growth.