China plans new measures to spur consumption for next five years
An employee sorts products on a shelf at a Zhaoyiming Snacks store, a chain operated by snack and beverage retailer Busy Ming Group, in Beijing, China, on Jan 9, 2026. (File photo: Reuters/Tingshu Wang)
BEIJING: China plans to roll out new policies from 2026 to 2030 to spur domestic consumption and tackle "prominent" imbalances in supply and demand, with the services sector becoming a key focus, a state planning official said on Tuesday (Jan 20).
Chinese leaders have pledged to "significantly" lift household consumption's share of the economy over the next five years, but analysts say the task would be challenging without structural reforms and demand-side stimulus.
"The issue of having strong supply but weak demand in the current economic operation is indeed a prominent problem," Wang Changlin, vice head of the National Development and Reform Commission (NDRC), said at a press conference.
China's economy grew 5 per cent last year, matching the government's target, as a boom in Chinese exports offset weak domestic consumption, a balancing act that is expected to be difficult to replicate.
Industrial output rose 5.9 per cent in 2025, outpacing the 3.7 per cent growth in retail sales, underscoring the supply-demand imbalance.
At another briefing on Tuesday, Vice Finance Minister Liao Min said the country would direct more funds toward lifting consumption and improving people's livelihoods this year, without elaborating on the size of the allocation.
The ministry earlier in the day announced an extension of interest subsidies for consumers, consumer-service enterprises and businesses in need of equipment upgrades to the end of 2026 to revive softening domestic demand.
The extension seeks to "further boost consumption and expand domestic demand, continue to reduce the cost of personal consumer credit, and enhance residents' willingness to spend," the ministry said.
Separately, it unveiled interest subsidies for up to two years for loans issued to small and medium-sized private enterprises from this year. It also introduced a guarantee plan totalling 500 billion yuan (US$71.83 billion) over two years for private investment.
Officials say services, including elderly care, healthcare and leisure, offer substantial room for growth.
"The services sector has now become a key focus in efforts to expand domestic demand," NDRC official Zhou Chen said.
The effect of a consumer goods trade-in scheme to drive up consumption has faded gradually, putting hopes on policies to support the services sector.
"It seems unrealistic to solely rely on exports to replace domestic demand and the key to China's stabilisation of growth will be services," said Gary Ng, senior economist at Natixis. He said he expected measures to land in March and April.
