China’s plan to increase demand by $ 700 billion will have a bigger and bigger impact, the official says.

BEIJING — China’s latest policy to boost demand will soon have a big impact on growth, a senior official at the economic planning agency told reporters Thursday.

Amid international concerns about oversupply in China and slow growth, Beijing earlier this year announced plans to boost domestic demand with subsidies and other incentives for infrastructure development and consumer goods trade.

That is officially expected to create more than 5 billion yuan ($704.23 billion) in annual spending on utilities, and an undisclosed “billions” for consumer goods such as cars and home appliances.

Implementation is already underway, said Zhao Chenxin, deputy head of the National Development and Reform Commission.

“We believe that this work will achieve greater and greater results,” said Semanderin, translated by CNBC.

China has set a GDP target of around 5% this year, after a 5.2% increase last year. Critics have been skeptical that the country can meet its goals without more stimulus. But this week Goldman Sachs and Morgan Stanley raised their forecasts closer to the official target, in part because of output growth.

Beijing aims to increase infrastructure investment by more than 25% between 2023 and 2027, Zhao said.

That translates to about 0.5 percent in annual GDP growth, according to Bruce Pang, chief economist and head of research for Greater China at JLL. He noted that infrastructure development accounts for 9% to 10% of the total GDP.

Other goals for 2027 include improving the energy efficiency of large energy-using vehicles, nearly doubling the number of recycled vehicles, increasing the volume of used vehicles by 45% and increasing the number of home appliances by 30%, said Zhao.

When asked about the contribution to GDP, Zhao stressed that the plan is not only aimed at boosting consumption and investment, but also reducing carbon emissions and improving safety – all based on Beijing’s efforts for “growth of high quality.”

China has tended to underestimate the headline GDP figure and focus more on growth.

Regarding funding for those improvements, Zhao said the central government will provide “strong support.”

He did not elaborate, while Fu Jinling, the director of the economic development department at the Ministry of Finance, Fu Jinling, explained plans to finance the development of agricultural machinery and provide tax benefits for water conservation. Fu noted that the People’s Bank of China will increase loans for businesses to purchase new equipment and improve their technology.

China is due to report first quarter GDP on Tuesday.

Francoise Huang, chief economist at Allianz Trade, sees some improvement from the second half of last year, although he expects the overall GDP to slow its growth this year compared to last year.

He said: “We’re not back to pre-pandemic levels or 2021, but I think from policy cuts to central governments taking a lot of pressure on spending, and of course this trade programme. . . . measures like this help build confidence in the private sector, which should reflect a mild recovery in domestic consumption.”

Those who also spoke at the press conference on Thursday were officials from the Department of Industry and Information Technology, the Ministry of Housing and Urban-Rural Development, the Ministry of Commerce and the National Market Regulatory Authority.

Although it is difficult to evaluate the results of these various announcements, JLL’s Pang said, “it shows a good start” for Beijing’s efforts to improve strategic cooperation among many government agencies. That’s according to CNBC’s translation of his words in Chinese.

The NDRC’s Zhao said he is aware of at least eight policies related to the industry, including an upcoming document from China’s Ministry of Commerce that will detail consumer trade.

Others he mentioned are construction, education, culture and health care.

The resource development and consumer business policy also focuses on improving the range of products that can be used.

Shan Zhongde, deputy head of the Minister of Industry and Information Technology, told reporters that the country aims to boost the use of digital tools to more than 90% of large industrial enterprises by 2027.

He also said that the ministry will promote the use of robots and the construction of “smart” factories that are digitally connected.

Beijing’s industrial policy support has helped the country become an export powerhouse, and it continues to produce high-end products such as electric cars.

There is “some evidence that the industrial policies and strategies of the past years and decades are paying off for Chinese companies and Chinese industrial companies,” said Huang of Allianz. “At the same time they should be concerned or remember that there may be this additional risk of increased security.”

US Treasury Secretary Janet Yellen focused her visit this month on dealing with the China crisis. German Chancellor Olaf Scholz is due to visit China next week.

China’s share of global exports in major categories such as machinery, chemicals, computers and household appliances has grown so much in the past few years that the country has surpassed Germany’s exports in those areas, according to an Allianz Trade report released on Thursday.

The survey found that German machinery exports to Southeast Asian countries fell by 14% compared to 2019, while Chinese imports from the region increased by 31%.