Stimulating shopping sprees still key

China is poised to prioritize boosting domestic demand to address economic imbalances and ensure resilient growth amid external uncertainties in the coming five years, officials and policy advisers said ahead of the two sessions.

As the country's top legislature prepares to deliberate the draft development blueprint for the 15th Five-Year Plan (2026-30) period, they said high on the agenda may include intensified macro stimulus measures to shore up domestic demand and bolder steps to improve rural household incomes to unlock consumption potential.

Sun Xuegong, director-general of the department of policy study and consultation at the Chinese Academy of Macroeconomic Research, said China is undergoing a phase of upgrading of both its industrial base and demand patterns.

The transition has inevitably brought challenges such as weak demand relative to supply as industrial capacity matures, a structural imbalance that also occurred in other manufacturing powerhouses such as Germany and Japan.

"These are precisely the structural problems the 15th Five-Year Plan will need to address with greater intensity. Overall, China is moving toward a development model in which domestic demand and domestic circulation become more self-sustaining and more robust."

Sun's remarks echoed Wang Changlin, deputy head of the National Development and Reform Commission. Wang said recently that, "We must promote an economic development model that is more dominated by domestic demand, stimulated by consumption and characterized by endogenous growth."

China has put more emphasis on boosting domestic demand since late 2024, which has boosted expectations in stock and foreign exchange markets, yet real-economy indicators such as growth in inflation, retail sales and fixed-asset investment remained anemic.

Looking at the coming five years, Marshall Mills, the International Monetary Fund's senior resident representative in China, recommends more ambitious reforms to decisively boost consumption — such as doubling rural pensions and granting full urban residency rights, or hukou, to China's 200 million migrant workers.

According to the staff report based on the IMF's 2025 Article IV Consultation with China — its annual assessment of the Chinese economy — China's private consumption as a share of GDP is estimated at 40.1 percent in 2025. In OECD economies, by contrast, the median is well above 50 percent, indicating substantial room for further increase.

"What we see as the future engine (for China) on the demand side would be private consumption," Mills told China Daily, adding that rebalancing toward consumption would make China's economy more resilient as a substantial contributor to global growth, while reducing its large current account and trade surpluses.

Sun also stressed improving the social security system as a key policy lever to strengthen household consumption and confidence.

Over the near term, Zhang Bin, a member of the National Committee of the Chinese People's Political Consultative Conference, said that strengthening countercyclical adjustments remains the most effective way to address insufficient demand, suggesting "more brave" monetary moves.

More policy rate cuts would lower financing costs for the private sector and increase returns on investment, while boosting the valuation of assets and helping repair the balance sheets of enterprises and households, said Zhang, who is also deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

Wang said the focus of macroeconomic policy is placed on "comprehensively expanding domestic demand", while reiterating the importance of promoting innovation and entrepreneurship to foster new quality productive forces.

"As a major engine of global growth, China boasts a vast market, a complete industrial system and strong innovation momentum," said Yin Zheng, executive vice-president of China and East Asia operations at French industrial conglomerate Schneider Electric, adding that these favorable conditions are creating broader development space across industries.