Household services consumption powers economy

China is stepping up efforts to stimulate household services consumption, seeing the sector not only as a key lever for near-term growth, but also as a long-term strategy to upgrade the economic structure and meet people's ever-growing need for improved living conditions.

Boosting services consumption is about more than just spending. It reflects deeper economic and social shifts and is regarded as essential for ensuring smooth domestic economic circulation and improving livelihoods.

The impact is already visible in growth momentum, where services consumption is emerging as both a "new engine" and a "stabilizer". With goods consumption reaching a plateau in the later stages of industrialization, services such as tourism, culture, education, healthcare and eldercare hold vast potential to drive GDP and counterbalance uncertainties in investment and trade. Being more labor-intensive than manufacturing, the services sector also generates greater employment. Therefore, lifting services consumption is vital for easing employment pressures and sustaining social stability.

Services consumption also represents a critical pathway for upgrading and optimizing the economic structure. Historical experience in advanced economies shows that once per capita GDP reaches a certain level, consumption patterns shift from being dominated by goods to being led by services. Expanding services consumption is therefore both consistent with the logic of economic development and essential for moving the industrial structure toward the medium-high end. Rising demand for services also exerts pressure on the supply side to improve quality and efficiency. For instance, the pursuit of high-quality education drives innovation in teaching content and delivery models, while growing demand for smart eldercare spurs the development of silver economy technologies and the broader wellness industry.

Furthermore, services consumption is the most direct expression of meeting people's ever-growing needs for better lives. Once the basic material needs of "having enough to eat and adequate clothing" are broadly satisfied, consumers naturally shift toward higher-level aspirations — such as more enjoyable travel experiences, richer cultural engagement, better health and more secure eldercare — all of which fall within the domain of services consumption. Tied closely to experience, emotion and personal growth, services consumption directly enhances quality of life and subjective well-being. In this sense, services consumption is key to achieving common prosperity, especially prosperity in cultural areas.

Beyond its immediate economic and social benefits, services consumption can also be regarded as a long-term investment in human capital. Spending on education, training, health and medical services fundamentally strengthens the capacity of the workforce. A better educated and healthier worker is more productive and able to generate greater social value, thereby fostering a virtuous cycle of economic development.

To effectively boost services consumption, policy efforts must operate on both short and long-term horizons, with comprehensive measures targeting four core dimensions — enabling households to "have the money to spend", "willingness to spend", "places to spend", and "confidence to spend".

First and foremost, it is necessary to strengthen the foundation of consumption and enhance households' capacity to spend. Lifting purchasing power is the essential prerequisite for boosting consumption. The employment-first policy should be firmly implemented, accompanied by strong support for small and medium-sized enterprises and the self-employed, which together form the backbone of job creation. Entrepreneurship and innovation should be encouraged to diversify income channels. Meanwhile, greater public investment in education, healthcare, eldercare and housing can reduce households' reliance on precautionary savings, ease future concerns and give people the confidence to open their wallets. Together, these moves facilitate shifting consumption patterns.

Second, expanding supply and creating more places to spend are key. A broader and higher-quality range of services is vital to meet evolving demand. This involves easing market entry barriers, encouraging innovation, rolling back administrative monopolies and lowering thresholds in key service sectors such as healthcare, education, culture and sports to attract private investment. Integrating services with technology should be prioritized, fostering new formats like smart tourism, online education and internet-based healthcare. To raise the quality of services, a "branding and standardization" strategy should be implemented, cultivating influential brands in areas such as cultural tourism, wellness and household services, while establishing comprehensive service standards to enhance overall quality. Improving the consumption environment is equally important, including upgrading commercial districts, cultural venues and tourist attractions. Meanwhile, the development of nighttime, weekend and neighborhood economies can enrich urban consumption scenes and create a more vibrant, livable and enjoyable consumption atmosphere.

Third, it is necessary to focus on the willingness among household to spend. Demand can be unlocked with targeted policies and promotional drives. Instead of relying on broad, one-size-fits-all consumption vouchers, more precise tools such as tourism, sports or training vouchers can channel spending power into specific service sectors. Ensuring the implementation of paid leave and promoting flexible work arrangements provide residents with the time necessary for leisure and travel activities, which is essential for unlocking the potential of tourism-related consumption. In parallel, large-scale promotional campaigns, such as national tourism festivals or cultural consumption seasons — along with regionally tailored signature events — can generate new consumption hot spots and sustain momentum.

Finally, safeguarding consumer rights to give households peace of mind in spending should be encouraged, alongside strengthening oversight and building credible trust mechanisms to sustain confidence. This requires stronger market supervision and a sound credit system to curb false advertising, price manipulation and unfair contract terms in the services sector. Rather than relying solely on punitive measures, a transparent credit evaluation and disclosure system can create positive incentives, rewarding trustworthy actors while exposing and penalizing dishonest ones. Consumer protections must also be enhanced through efficient complaint-handling platforms and practical measures such as advance compensation or unconditional returns where applicable, thereby reducing the cost of defending consumer rights. In the digital era, robust safeguards for data security and privacy are essential, making strict oversight of platform companies a cornerstone for protecting personal information and reinforcing trust in the marketplace.

In conclusion, boosting household services consumption is a systemic endeavor that requires joint efforts from the government, enterprises and society. The government should focus on building a sound institutional, policy and market environment. Enterprises should commit to delivering higher-quality, more diverse and more innovative services. Society as a whole should foster an atmosphere that encourages consumption and enhances the quality of life. Only such concerted efforts can unlock the enormous potential of services consumption and provide lasting momentum for China's high-quality economic development.

The writer is a senior research fellow at the Chinese Academy of Macroeconomic Research and former director of the Market and Price Research Institute of the Chinese Academy of Macroeconomic Research.

The views do not necessarily reflect those of China Daily.