Structural upgrading, policy support fuel long-term growth

BEIJING — As China's consumption sector expands amid structural upgrades, policies designed to stimulate spending are gaining momentum to reinforce this key pillar of the world's second-largest economy.

In its latest policy move, Chinese authorities — including the Ministry of Commerce and the People's Bank of China — unveiled a circular on Dec 14, calling for coordinated fiscal, commercial and financial policies to channel credit into key consumption sectors and expand support for emerging consumption fields such as eldercare, culture, tourism, digital services and green industries.

China will roll out plans to boost household incomes, advance high-quality full employment and raise basic pensions to enhance consumption capacity, an official from the Office of the Central Committee for Financial and Economic Affairs said, adding that quality products and services will be provided to meet new demand and unreasonable restrictions will be lifted to fully unlock consumption potential.

Expanding domestic demand has been identified as the top priority task for China's economic work in 2026, with a focus on promoting a better match between supply and demand. "This is not only crucial for stabilizing the economy in the short term, but also an inherent requirement for high-quality development in the medium and long term," said Wang Wei, an expert with the Development Research Center of the State Council, at a recent forum.

In recent years, the supply side of China's consumption sector has made substantial headway, with new scenarios, business formats and models emerging to better align with evolving consumer demand and drive balanced supply-demand development, Wang said.

Industry experts at the forum noted that industrial innovation and technological upgrading have been advanced to meet consumers' new needs for quality and personalization, driving growth in the consumption sector. The National Bureau of Statistics said that in the first 10 months, high-tech and strategic emerging service industries maintained strong growth momentum.

"The low-altitude economy is a vivid example of new scenarios catering to new consumer demand," said Guo Liang, CEO and chief scientist at Aerofugia. Guo highlighted upgraded consumption scenarios provided by electric vertical take-off and landing aircraft, including cutting travel time for business commuters, enriching sightseeing experiences for tourists, and improving the efficiency of emergency rescue and medical services.

Experts remain upbeat about the long-term potential of China's consumer market. Wang predicts that during the 15th Five-Year Plan (2026-30) period, consumption's share of China's total economic output will exceed 60 percent, while services consumption will account for over 50 percent of household consumption, emerging as the consumer market's primary driver.

China is shifting from a goods-dominated consumption model to one balanced between goods and services, with demand for services such as culture, tourism, eldercare and childcare remaining robust, the official from the Office of the Central Committee for Financial and Economic Affairs said.

China's services-friendly consumption policies have continued to be optimized. In its campaign to boost consumption launched in March, China pledged support for living services, ice and snow economy, and cultural, sports and tourism industries to improve the quality of services consumption. NBS data show services retail sales rose 5.4 percent year-on-year in the first 11 months, outpacing goods retail sales growth.

In the meantime, China's services consumption sector is also opening wider to the world. The country has optimized visa and tax refund policies to facilitate inbound tourism, with the number of overseas visitors claiming China's departure tax refund surging 285 percent year-on-year during the period, said the State Taxation Administration.

According to a document released in September, China has pledged to advance high-level opening-up by promoting the orderly opening of the internet and cultural sectors, expanding the pilot programs for opening-up in fields such as telecommunications, healthcare and education, as well as supporting the inclusion of more services consumption sectors in the Catalogue of Encouraged Industries for Foreign Investment.

"China will expand and share the benefits of opening-up and cooperation, and offer new global opportunities through new development momentum in the country," said Commerce Minister Wang Wentao.

Xinhua