The National Development and Reform Commission (NDRC) of China is working to strengthen household spending and build consumer confidence. Recently, they’ve noticed increased competition among companies. The NDRC is exploring ways to boost support from the central government. This aid is meant to ease funding pressures on local governments for essential projects.

Addressing Dumping Cases

Additionally, the commission will tackle issues related to dumping and misleading advertising. They also aim to improve how competition is governed. Recent statements from the NDRC reflect ongoing economic challenges seen in the latest data. For example, retail sales growth in July 2025 dropped to 2.1%, and the Producer Price Index fell by 3.5%. This highlights the fierce competition among businesses. Such admissions suggest we may soon see targeted policy responses. The promise of increased central government support for local authorities indicates a potential boost for infrastructure and related fields. It might be a good time to prepare for a short-term uplift in indices dominated by state-owned enterprises. Similar stimulus announcements in late 2023 led to notable temporary gains in industrial commodities and construction materials.

Boosting Consumer Spending

Given the low consumer confidence, which is currently near a two-year low of 88.5, we expect actions to encourage consumer spending. Direct stimulus could lead to a quick rise in stocks related to consumer goods. This could be a good opportunity to consider call options on major consumer-focused ETFs, targeting a rebound driven by policy changes. However, the mention of investigating ‘disorderly competition’ brings regulatory risks, especially for tech and e-commerce companies. We recall how previous regulatory actions starting in 2021 led to long downturns for major tech firms. This warrants caution and might suggest using protective put options on certain aggressive e-commerce companies. In summary, the mix of pro-growth stimulus discussions and renewed regulatory concerns may increase market volatility. The CBOE China ETF Volatility Index (VXFXI) has already risen to 35, and we expect these conflicting signals to push it even higher soon. Therefore, using strategies that benefit from price fluctuations, rather than betting on a specific outcome, may be the best approach. Create your live VT Markets account and start trading now.

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