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Investing.com -- China has unveiled a comprehensive Special Action (WA:ACT) Plan to Boost Consumption, aimed at rekindling domestic demand, stabilizing financial markets, and regaining the trust of foreign investors. This strategic move, according to Nigel Green, CEO of deVere Group, a global financial advisory firm, is a clear indication of Beijing’s commitment to reestablish its appeal to global investors, particularly at a time when the US is perceived as an unstable and unpredictable investment destination.
The new plan, announced on Sunday by the General Office of the Central Committee, focuses on enhancing consumer confidence, alleviating household financial stress, and creating a more secure investment environment. The multi-faceted initiative prioritizes domestic demand, aiming to "enhance consumption capacity by increasing income and reducing burdens." This is crucial in light of a sluggish consumer landscape, marked by February’s consumer price index recording its steepest drop in over a year.
Beijing is also committing to "multiple measures" to stabilize equity markets, responding directly to investor worries over regulatory uncertainty. Moreover, the plan includes the creation of more bond products tailored for individual investors, thus broadening wealth-building opportunities and deepening the financial market.
Following the plan’s announcement, the CSI 300 and Hong Kong’s Hang Seng Index both saw gains of 0.1% on Monday, indicating early optimism, as noted by Nigel Green.
China’s Premier Li Qiang emphasized last week that boosting consumption would be the government’s top economic priority for the year ahead. The urgency is evident: deflationary pressures have been prevalent, with the producer price index in contraction since October 2022. Without reinstating confidence among domestic consumers and international investors, Beijing risks losing its footing in the global financial markets.
This strategic shift comes as the US’s investment appeal seems to be weakening. With President Trump’s return to the White House, businesses and investors are preparing for another round of unpredictable policy changes. Concerns vary from escalated trade wars to fiscal mismanagement and market volatility.
Green further notes that while the US has traditionally been a safe haven for global capital, confidence is being eroded by Trump’s aggressive tariff hikes and unpredictable policymaking. As investors weigh stability and long-term growth, China’s pragmatic economic approach may start to appear more appealing.
China’s recent policy rollout signifies a willingness to adjust its course to regain global capital. Whether this leads to a full-scale revival of foreign investment remains to be seen, but the momentum appears to be shifting. As US markets grapple with increasing uncertainty, the world’s second-largest economy is positioning itself as a more predictable, opportunity-rich alternative.
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