China Shifts Economic Focus, Announces New Drive to Boost Service Sector Consumption. China has unveiled plans for a new five-year policy cycle (2026-2030) aimed at stimulating domestic consumption. The government’s focus is pivoting towards the services sector to correct a significant supply-demand imbalance in the economy.
Officials from the National Development and Reform Commission (NDRC) identified “strong supply, but weak demand” as a prominent issue. While the economy met its 5% growth target in 2025, it was driven by strong exports, masking weaker domestic consumption. Data underscored the gap: industrial output grew 5.9% last year, while retail sales expanded only 3.7%.
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“The services sector has now become a key focus in efforts to expand domestic demand,” stated NDRC official Zhou Chen. The government sees substantial growth potential in areas like elderly care, healthcare, and leisure.
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The new strategy signals a shift in tools. While subsidy programs for goods like electric vehicles will continue, the emphasis will move from manufactured goods to services. This aligns with a broader pledge to “significantly” increase household consumption’s share of the economy over the next five years, though no specific target was given.
The announcement follows recent stimulus efforts, including a 62.5 billion yuan ($8.98 billion) fund launched in December for consumer trade-in schemes on appliances and vehicles.
