Top China official vows to boost consumption to overhaul economy

CHINA will press ahead with building a unified market to unleash domestic consumption as countries around Asia face a “pivotal juncture” in the transformation of the global economy, a top economic official said.

As the country opens its economy further, it will create more business opportunities for the region, Vice-Finance Minister Liao Min said in a speech delivered on Wednesday (Feb 4) at a meeting of finance and central bank deputies from Asia-Pacific Economic Cooperation (Apec) member economies in Shanghai.

“China is shifting towards new growth drivers in order to pursue high-quality development,” Liao said. “We are pressing ahead with building a unified market to further unleash domestic demand and consumption potential. Particularly services consumption is gaining strong momentum. The Chinese economy will be increasingly demand-driven.”

The comments came as Chinese authorities have repeatedly vowed to dismantle local protectionism and inter-provincial trade barriers, which have suppressed consumption and fuelled industrial overcapacity, sparking a prolonged price war and exacerbating trade tensions.

China’s economic growth matched the government’s goal of 5 per cent last year, with exports contributing a third of the expansion while domestic demand stayed subdued. The lopsided model is becoming increasingly unsustainable amid rising protectionism among trade partners, prompting Beijing to list boosting domestic demand as the top economic priority this year.

Authorities have already taken some early measures to try to stimulate consumption and investment. They announced at the end of December initial public spending plans worth a total of US$51 billion to invest in key national projects and provide subsidies for the consumer goods trade-in programme.

Last month, the People’s Bank of China delivered a 25-basis-point cut to the interest rates on its structural monetary policy tools and the Ministry of Finance unveiled a slew of loan perks to encourage businesses and consumers to borrow.

In a gesture to reassure countries concerned about Chinese goods flooding their market, and also as part of efforts to reduce excess manufacturing capacity within China, the government has said that it will cancel or reduce tax rebates on hundreds of products, including solar cells and batteries, starting Apr 1.

Expectations are rising that Beijing will lower its national economic growth target this year, given the difficulties in turning around corporate and household confidence amid entrenched deflation and a years-long housing slump. Concerns over debt risks and banks’ profit margins will also likely hold policymakers back from unleashing aggressive stimulus.

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Over a dozen Chinese provinces have reduced their economic growth targets for 2026, after President Xi Jinping indicated greater tolerance for a slower expansion and warned against wasteful investment.

In his speech, Liao said the current global economic landscape is complex and marked by challenges and policy uncertainty. He also cited ongoing volatility, rising geopolitical tensions, and supply-chain disruptions.

“The Asia-Pacific region remains one of the fastest growing regions in the world, driven by technological advancement, and the digital transformation is unleashing tremendous economic potential,” said Liao. “That said, we face persistent headwinds.” BLOOMBERG