China’s retail prosperity index rises as consumption stimulus policies take effect

The China General Chamber of Commerce reported on Monday that the retail prosperity index rose to 51.1 points in January, a 0.7 percentage point rise from the previous month and 0.2 points higher year-on-year. The data indicates increased confidence among retail enterprises in the consumer market.

The sub-index for merchandise businesses hit 51.8 percent, up 1.8 percentage points from December. The profitability sub-index climbed by 4.9 points, while the average transaction value index increased by 2.0 points, both marking their highest levels in a year, indicating a recovery in business performance.

Analysts noted that the uptick is largely attributed to the Lunar New Year shopping and recently launched trade-in programs by the government.

On Monday, Central China's Henan Province announced the issuance of Spring Festival consumption vouchers. The provincial government plans to distribute 200 million yuan ($27.3 million) in vouchers targeting retail, dining, cultural tourism, and accommodation sectors, and encouraged local governments to adopt similar measures.

Other regions, including East China's Shandong Province, Southwest China's Sichuan Province, North China's Hebei Province, and North China's Shanxi Province have introduced new policies for large-scale equipment renewals and consumer goods trade-ins, offering subsidies for the trade-in of automobiles, home appliances, and other equipment.

The Central Economic Work Conference at the end of 2024 outlined clear policy directions, putting consumption boost at the top of the agenda in 2025. The Spring Festival holidays are projected to drive significant demand in lower-tier city markets, driven by festive shopping and a surge in homebound travel, according to the China General Chamber of Commerce.

Last year, the stimulus measures delivered notable results. The Ministry of Commerce reported that the trade-in program for consumer goods had driven over 1 trillion yuan in sales as of December 13, 2024.

In 2025, the Chinese government plans to expand the issuance of ultra-long special treasury bonds to support the implementation of large-scale equipment upgrades and consumer goods trade-in programs, Yuan Da, deputy secretary-general of the National Development and Reform Commission told a press conference on Friday.

The government will broaden the range of areas eligible for funding, and consumers will receive subsidies to purchase three categories of digital products: mobile phones, tablets, and smart watches or wristbands, said Yuan.