China to ‘significantly’ boost consumption share of economy
It will “form an economic development model driven more by domestic demand and powered by consumption”
[BEIJING] China pledged to “significantly” boost the share of consumption in its economy in the next five years, as it looks to build an economy less reliant on trade.
The Communist Party made the pledge on Tuesday (Oct 28) in a detailed communiqué that followed its fourth plenum held last week in Beijing. China will “form an economic development model driven more by domestic demand and powered by consumption,” it said in the document that lays out basic principles for the next five-year plan, which starts in 2026.
To achieve that, the world’s second-largest economy will make use of policies including those related to industry, prices, employment, consumption, investment and environment and trade, according to the readout. At the same time, China pledged to “maintain reasonable growth” in investment, another driver of domestic demand.
The document adds details to a brief communiqué released last week, which underlined a continuing focus on technological self-reliance. It also reiterated a pledge to bolster the domestic market, as top officials look to insulate the economy from foreign pressures and build a sustainable engine for growth.
The meeting sought to hammer out China’s next five-year plan, a set of policies intended to guide development and signal priorities of the country’s leadership. President Xi Jinping led the drafting of the programme and delivered an explanation of the proposals at the discussions in Beijing, according to state media.
The full five-year blueprint will only be approved and released in March during the annual meeting of the national legislature.
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Authorities are planning for China’s economic future amid growing pushback abroad over a continued flood of exports from the world’s biggest manufacturing nation. And deeper divisions with the US are likely to persist even if the two countries are unable to negotiate a trade truce.
Growing trade protectionism aimed at China is a key reason behind its intensified push to develop technology and advanced manufacturing, as Washington targets a widening range of the country’s tech sectors, ranging from semiconductors to pharmaceuticals.
But as hurdles rise overseas, domestic households are struggling to absorb enough of the goods produced by China’s bloated manufacturing industries. It’s resulting in a glut that’s contributed to deflation pressures at home and pushed prices into a record-long streak of declines.
In a sign that policymakers recognise the importance of boosting household spending, the communiqué mentioned “consumption” four times, compared with just once in a similar statement in 2020. BLOOMBERG
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