China's central bank is under increasing pressure to adopt new policy tools aimed at boosting consumer consumption, as expressed by Wei Gejun, an adviser to the People's Bank of China (PBOC), during remarks made public on March 4, 2025.
With the annual meeting of China's National People's Congress starting on March 5, policymakers are confronted with significant challenges, primarily due to the possibility of heightened tariffs from the United States affecting Chinese exports. Wei Gejun emphasized the need for the central bank to explore structural monetary policies related to consumer spending by encouraging financial institutions to issue more consumer credit. "This approach aims to create a virtuous circle where government policies stimulate consumption, consumption drives the market, the market guides enterprises, and enterprises expand investment," Wei stated.
Experts believe it is imperative for China to implement consumer-focused policies with long-term effects amid the shifting economic sentiments. Wei's urging reflects the broader economic strategy needing reshaping to support the recovery anticipated by many economists. He underscored the importance of not only spurring consumption but also stabilizing the financial environment. "We should expand the central bank's macroprudential and financial stability functions... to help sustain economic recovery and ensuring price and financial stability," he noted, advocating for the reassessment of existing strategies.
Analysts polled by Reuters previously indicated little expectation for recovery within the fragile property sector until 2026. Wei highlighted the significance of bolstering policy tools to aid the housing market, including enhanced funding for affordable housing construction—a dire necessity as many local governments struggle under the weight of their financial responsibilities.
The PBOC had implemented measures to stabilise the property market last year, yet these have yielded minimal results, resulting in calls for innovative solutions. Wei suggested the need for large-scale direct state purchases of vacant apartments to mitigate the crisis faced by the sector, reinforcing the urgency to develop new mechanisms to influence housing availability positively.
China's financial markets also require attention, with Wei calling for expanded support based on lessons learned from two recently launched policy tools. Last September, the PBOC introduced two mechanisms aimed at supporting capital markets — including a swap program initially sized at 500 billion yuan (approximately $68.70 billion). This program facilitates easier access to funding for funds, insurers, and brokers, encouraging them to buy stocks and strengthen market stability.
With the looming pressures of international economic conditions and domestic challenges, the PBOC's proactive measures will be pivotal for China. Wei's insights reflect the growing consensus among economic leaders, reinforcing the idea of continuous adaptation to promote sustainable growth.
The financial stability and consumer confidence directly link back to the efficacy of these anticipated policies. If successfully executed, the introduction of new monetary tools could play a substantial role, helping to reverse the current economic stagnation and reignite consumer spending—a key driver for China's economic aspirations.
Overall, Wei Gejun's call to action emphasizes the importance of flexibility and innovation within China's central banking framework. With the arrival of the National People's Congress, it remains to be seen how these proposals will be received and implemented by policymakers as China strives to navigate complex economic landscapes moving forward.