China unveiled measures on Tuesday to help boost consumption, including the possible removal of restrictions on auto purchases, as growth in the world's second-biggest economy falters amid mounting U.S. trade pressures.
The State Council or cabinet said in a statement that local governments that have restrictions on auto sales should explore gradually relaxing or removing those curbs, while they should also encourage the purchases of new energy vehicles.
European auto stocks rose on the news that Beijing was looking to loosen vehicle purchase restrictions.
China's economy stumbled more sharply than expected at the start of the third quarter, as Beijing's trade dispute with the United States took a heavier toll on businesses and consumers. Second-quarter economic growth slowed to a near 30-year low.
The automobile sector, a pillar of industrial growth, has been a casualty of falling demand, with overall car sales down for a 13th consecutive month in July.
Analysts expect more economic support measures in the coming months, including steps to boost domestic consumption.
"China data weakness will likely be more visible in August and September, and policymakers will likely lean towards more intensive easing," said analysts at the Bank of America Merrill Lynch in a note on Monday.
"We expect policy loosening to resume in infrastructure investment, consumption stimulus and monetary easing."
Retail sales in July pointed to consumer caution, growing at the weakest pace since April. Sales of automobiles and jewellery declined from a year earlier, while sales of garments, home appliances and telecommunications equipment posted low single-digit growth.
The State Council added it would encourage commercially struggling malls, stadiums and old factory zones to be transformed into commercial complexes, gym and entertainment centres, as well as renovating commercial pedestrian streets across the country.
It said Beijing would extend retail hours to promote "the night economy", with convenience stores and restaurants open longer.
Beijing will additionally allow city-level governments to approve retail sales of refined oil products, it said, adding that it would also encourage credit support for purchases of new energy vehicles and smart home appliances.