China's government has revealed ambitious plans to boost consumption by increasing wages and reducing financial burdens. The announcement, made Sunday by the Chinese Communist Party's central committee and state council, comes as the country seeks to increase consumer confidence and strengthen its struggling economy, according to state media.

The plans include promoting "reasonable wage growth" and improving minimum wage adjustment mechanisms. Officials also proposed childcare subsidies to address concerns from young adults who cite financial strain as a reason for not having children.

Additional measures focus on unlocking earnings potential for homeowners and promoting new markets such as AI-powered products and snow and ice tourism. According to state media outlet Xinhua, the plan connects consumer spending to broader social goals like elderly care improvement and work-life balance.

Fu Linghui from the national bureau of statistics acknowledged Monday that while the economy is moving in the right direction, significant challenges remain. "The external environment has become more complex and grim, domestic effective demand is insufficient, and the foundation for the continuous recovery of the economy is still unstable," Fu stated.

The announcement follows China's recent Two Sessions political meeting where the CCP set a 5% growth target. It also comes after data showed consumer prices had dropped into deflation last month for the first time in a year.

The new measures had mixed market impact:

• Stock markets in South Korea, Hong Kong and Australia closed higher
• Mainland Chinese investors were less enthusiastic, with the blue-chip CSI 300 closing 0.2% down

While retail spending has increased compared to last year, unemployment has reached its highest level in two years, and house prices have fallen in nearly all medium and large cities. China's economy hit its 5% growth target in 2023, but this was still the country's slowest growth rate since 1990, excluding the pandemic years.

The country faces additional pressure from ongoing trade tensions with the US, as Donald Trump has suggested expanding tariffs on Chinese exports. "The risk to the economy is the damage from higher US tariffs on China's exports which will likely show up in the trade data over the next few months," said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

The economic tensions have directly impacted major retailers operating in China. Chinese authorities recently summoned Walmart executives after reports that the US company had asked Chinese suppliers to reduce prices in response to Trump's tariffs. State media outlet Yuyuantantian declared that "Chinese companies shall not bear the blame for US tariffs," highlighting the government's protective stance toward domestic manufacturers.