Why is China spending billions to get people to open their wallets?

The Chinese government has promised new child care subsidies, increased wages and better paid leave to revive a slowing economy. That is on top of a $41bn discount programme for all sorts of things, from dishwashers and home decor to electric vehicles and smartwatches.mBeijing is going on a spending spree that will encourage Chinese people to crack open their wallets.

Simply put, they are not spending enough.

Monday brought some positive news. Official data said retail sales grew 4% in the first two months of 2025, a positive sign for consumption data. But, with a few exceptions like Shanghai aside, new and existing home prices continued to decline compared to last year. While the US and other major powers have struggled with post-Covid inflation, China is experiencing the opposite: deflation - when the rate of inflation falls below zero, meaning that prices decrease. In China, prices fell for 18 months in a row in the past two years.

Read more