Chinese policymakers have pledged to “significantly” raise household consumption as a share of GDP over the next five years, making the shift toward domestic consumer spending a strategic underpinning of the forthcoming 15th Five-Year Plan (2026–2030). Officials, including the Deputy Director of the Central Financial and Economic Affairs Commission, stated that expanding domestic demand is essential to building a robust domestic market and increasing the overall reliability and dynamism of the Chinese economy. This move is driven by recognition that household consumption currently lags global averages by about 20 percentage points of GDP, and that low consumer confidence and a slowing property sector are challenging growth.
The plan emphasizes income redistribution through measures that focus on directing more resources toward households, including through equal employment and government transfer programs (subsidies and social benefits). To translate this demand into tangible growth, the government is intensifying incentives for the tech and manufacturing sectors. This includes expanded trade-in programs for durables like electric vehicles and appliances, as well as subsidies for consumer and small business loans, with the aim of creating a positive feedback loop where new demand drives new supply, thereby creating fresh demand.While the new plan primarily focuses on technological self-reliance and industrial upgrades to weather external risks, the renewed push for consumption aims to balance the economy and maintain stability. Economists note that persuading the Chinese public, which holds one of the world’s highest savings rates, to spend will be a major challenge, requiring sustained policy commitment beyond short-term stimulus.
