Chinese policymakers have committed to implementing strong fiscal and monetary measures in 2026, explicitly pledging to “significantly” raise the proportion of household consumption as a share of GDP over the next five years. This mandate, a key element of the recently outlined 15th Five-Year Plan (2026–2030), signals a critical policy pivot aimed at shifting the world’s second-largest economy toward domestic consumer spending as exports slow and reliance on fixed investment reaches its limit. Currently, household consumption’s share of GDP is approximately 40%, significantly lagging behind advanced economies.
To achieve this rebalancing, the government will employ a supply-and-demand balanced approach, accelerating policies to enhance residents’ consumption capacity. Specific measures to be carried into 2026 include continually increasing public service expenditure in areas like healthcare and social protection to reduce fear-driven precautionary savings among households, and actively supporting the continuation of consumption trade-in programs for big-ticket items like electric vehicles and home appliances.
Furthermore, new policies are targeting the service sector with interest subsidies on consumption-tailored loans for individuals and businesses, with the goal of stimulating spending in high-growth areas like tourism, elderly care, and culture. Analysts view the explicit commitment to bolster household spending as a crucial development for stabilizing economic growth, though achieving a significant rise in consumption will be challenging given high debt and the reluctance of households to spend.
