China announced new policies on Sunday to encourage more spending and help its economy during a trade war with the U.S. One of the changes is lowering the amount foreign tourists need to spend in order to apply for a tax refund. Travelers can now apply for a refund if they spend 200 yuan (around $27) at the same store on the same day, down from the previous minimum of 500 yuan (about $69). The maximum refund amount has also been increased to 20,000 yuan ($2,745).
The government will expand the number of stores offering tax refunds and make the process easier. Some regions will set up refund points where travelers can get their rebates right after making a purchase, especially in areas with many tourists.
Sheng Qiuping, China’s Vice Minister of Commerce, mentioned that spending by inbound tourists made up about 0.5% of China’s GDP in 2024, which is lower than in many other countries where it ranges from 1% to 3%. This shows there is a lot of potential for growth in this area. Last year, spending by foreign visitors reached $94.2 billion, a 77.8% increase.
A tourist couple in BeijingChina’s economy grew by 5.4% in the first quarter of 2024, supported by strong exports ahead of tariff increases from U.S. President Donald Trump. However, analysts expect China’s growth to slow down in the coming months as tariffs up to 145% on U.S. imports come into effect. In response, China has imposed 125% tariffs on American goods and is focused on keeping its markets open to trade and investment.
To boost the economy, China has been encouraging more consumer spending and private investment, offering subsidies for trade-ins of cars and appliances and increasing funding for housing and other industries facing financial difficulties.