Shares of Chinese e-commerce giant Alibaba (BABA) got a lift from Beijing’s policymakers this month after it was announced that boosting domestic consumption topped the priority list on the nation’s to-do list. Now China’s leaders have fleshed out a bit more detail about what this entails with an outline of how it intends to “vigorously boost consumption.”
China’s Special Consumption Plan
China on Sunday announced a “Special Action Plan to Boost Consumption” to “expand domestic demand”. It reiterated Beijing’s plan to stabilize the real estate and stock markets, establish a childcare subsidy scheme and boost tourism. The announcement follows China’s Two Sessions meeting in Beijing, where lawmakers said consumption growth was the top priority this year. They are worried about flatlining consumption trends that have seen consumer prices falling into deflation in February.
Although the document was short on how the plans will be achieved or any details of fiscal spending, it did highlight the way policymakers are thinking and the themes they see as important, such as income growth and the lack of a social safety net. These and issues like childcare are seen as essential to help China transition towards a consumption-driven growth model.
AI Gets a Nod, Naturally
There was also a nod to technology and some references that would appear to pertain to the likes of BABA and online retailer JD.com (JD) – for instance, the document states a desire to “deeply implement” digital consumption and “vigorously cultivate quality e-commerce,” according to a Google (GOOGL) translation.
The government also wants to promote “artificial intelligence + consumption,” and “accelerate the development and application of new technologies and products such as autonomous driving, smart wearables, ultra-high-definition video, brain-computer interfaces, robots, additive manufacturing, and open up a new track for high-growth consumption.” BABA recently launched its new open-source AI (artificial intelligence) model, which challenges DeepSeek’s R1 model.
Meanwhile, data on Monday showed China’s retail sales rising by more than expected. Retail sales rose by 4.0% in the January-February period from a year ago, according to official data, which shows an improvement on the 3.7% year-on-year in December 2024 and a three-month low of 3.0% in November. Consumption trends are well down on the +10% growth experienced consistently in the years before the pandemic, however, forcing policymakers to pull different economic levers to stimulate growth.
Last month BABA reported revenues from Taobao and Tmall Group, the company’s core e-commerce division, rose 9% year-over-year to over 100 billion yuan, about $13.8 billion.
Is BABA a Good Stock to Buy Now?
On Wall Street, BABA stock commands a Strong Buy consensus rating based on 16 unanimous Buy ratings. The average Alibaba stock price target of $165.61 implies 17% upside potential from current levels.
Questions or Comments about the article? Write to editor@tipranks.com