Suzhou: Consumption policies shift from short-term stimulus to systemic expansion of domestic demand

The proposal in the government work report for the year 2025 regarding the consumption sector has shown significant changes compared to the reports of the past five years. Consumption policies have shifted from short-term stimulus to systemic expansion of domestic demand. This is mainly reflected in the priorities of policies, innovations in policy tools, expansion in the consumption sector, and long-term strategic adjustments. 1) Priority of policies elevated: Consumption has, for the first time, become the top priority in government work tasks. In the year 2025, consumption has been explicitly listed as the top priority in the government's ten major work tasks, with the proposal to "vigorously boost consumption and comprehensively expand domestic demand," emphasizing the need to make domestic demand the driving force and stable anchor for economic growth. Compared to the report in 2024 where expanding domestic demand was third on the list of priorities, it is evident that the policy focus has shifted towards consumption. 2) Innovation in policy tools: Unprecedented increase in fiscal support, detailed special actions. In 2025, fiscal support has been increased, with the deficit rate raised to 4% (the highest in 30 years), allocating 300 billion yuan of ultra-long-term special national bonds to support the replacement of old products with new ones, and proposing for the first time a "special action to boost consumption." Previously, policies relied more on local subsidies (such as the rural appliance stimulus) with a lack of support from special national bonds at the central level, and the means of stimulating consumption were relatively scattered. 3) Expansion in the consumption sector: Focus on service consumption and new formats. In 2025, there is a focus on service consumption, concentrating on areas such as elderly care, early childhood education, and household services to expand and improve quality, proposing solutions for closing the gap in service supply for the elderly and children; it explicitly promotes the development of digital, green, and smart consumption, supporting the application of large models, embodied intelligence, future industries like 6G, etc. In the past, emphasis was more on the recovery of traditional goods consumption (such as automobiles, appliances) and the revival of cultural and tourism consumption. 4) Long-term strategic adjustments: Combining new productive forces with consumption upgrade. In 2025, "new productive forces" are linked with consumption upgrades, emphasizing the role of technological innovation in driving optimal consumption supply. For example, enhancing cultural and tourism experiences through artificial intelligence, digital technology, promoting green consumption and a circular economy. Previously, the "new productive forces" in reports focused more on industrial upgrading, with weaker direct associations with consumption. In 2025, it is explicitly mentioned as a support for consumption upgrade for the first time. We will analyze the content of the government work report in specific areas such as consumption stimulus, special action to boost consumption, education, fertility subsidies, and consumption tax reform. In terms of consumption stimulus: An unprecedented 300 billion yuan in ultra-long-term special national bonds will support the replacement of old products with new ones, the GDP growth target is 5%, the deficit rate is 4%, basically meeting market expectations. In our previous article "How to Expect the Stimulus Effect of Consumer Vouchers," the GDP target and deficit rate both fell within the sensitivity calculation range, along with the 300 billion yuan stimulus for consumer products. The estimated scale of voucher/subsidy distribution in 2025 is around 520 billion yuan, with a high probability of stimulating incremental consumption to over a trillion yuan. The significant 300 billion yuan stimulus for new products focuses mainly on large commodity items such as home appliances and vehicles, with additional subsidies for goods/services consumption provided by local governments. Special action to boost consumption: Implement and optimize vacation systems to unleash the potential for cultural, tourism, sports consumption. Amend duty-free shop policies to expand inbound consumption. Deepen the construction of international consumption center cities and improve county-level commercial systems. Continuing to unleash consumption potential from both the supply and demand sides, while considering different levels of consumption scenarios. In education: Expand the supply of high school education degrees, as opposed to the wording in 2024, which emphasized strengthening the construction of ordinary high schools in counties; no mention was made of the "continuously deepening dual reduction" term from 2024. Fertility subsidies: Formulate policies to promote fertility, provide parenting subsidies, vigorously develop integrated childcare services, increase the supply of universal childcare services; and gradually implement free preschool education. Consumption tax reform: Propose to "accelerate the transfer and devolution of some consumption tax collection stages to local levels, increasing local fiscal autonomy." Consumption tax legislation may be a key focus in the second half of this year. Investment recommendation: Pay attention to sectors such as gold jewelry, commerce, education and human services, Zhejiang China Commodities City Group, Anker Innovations Technology, Chow Tai Seng Jewellery, CHOW TAI FOOK, Lao Feng Xiang, Guangdong CHJ Industry, Shanghai Jahwa United, Guangzhou Ruoyuchen Technology, MIXUE GROUP, Xueda (Xiamen) Education Technology Group, FESCO Group Co., Ltd, etc. This article is sourced from the WeChat public account "Soochow Consumer Upgrade Research," authored by Soochow Analyst Wu Jincao's team; GMTEight edits: Wenwen.