by Zhao Xiaopeng, Song Yajing

 

BEIJING, Mar.10 (China Economic Net) - "Consumption" appeared 32 times in China's 2025 government work report, highlighting Beijing's determination to boost domestic demand as the cornerstone of economic growth this year. This renewed emphasis reflects both concerns over economic headwinds in an uncertain global landscape and confidence in the market's untapped potential.

 

Prioritizing consumption  

 

The report places a strong emphasis on "vigorously boosting consumption" and outlines comprehensive measures to position domestic demand as the "main engine and anchor of economic growth." This marks a strategic shift in China's economic policy, acknowledging the constraints of the traditional growth model that relies on investment and export. 

 

"From an academic perspective, I see coordination among three key initiatives in the government work report: boosting consumption, improving livelihoods, and enhancing investment efficiency," said Professor Lu Ming, Director of the Shanghai Institute for National Economy and a CPPCC member. He characterizes these as "different manifestations of the same issue." 

 

A nuanced outlook 

 

At first glance, China's consumption data may appear concerning, but a deeper analysis reveals structural imbalances rather than simply weak demand. The simultaneous rise in household savings alongside expansionary fiscal and monetary policies signals more than just cautious consumer sentiment.  

 

"China's situation differs from other economies," explains Professor Lu. "While some households face slower income growth, many sectors see strong demand but struggle with supply constraints—whether in terms of quantity, quality, or variety." 

 

This dichotomy is particularly evident among young consumers. The post-90s and post-2000s generations are frugal with daily necessities, leveraging platform economies for cost savings, yet they willingly spend on experiences that highlight individuality—such as travel, concerts, and music festivals.

  

Building momentum 

 

Several positive forces are underpinning consumption growth: 

 

Targeted policy interventions are delivering results. Trade-in programs for automobiles and home appliances fueled significant spending in 2024, with over 6.8 million automobile trade-ins generating 920 billion yuan in consumption.

  

Service sectors present structural opportunities. Segments such as healthcare, education, eldercare, childcare, and cultural services suffer from supply shortages, particularly in populous regions and areas with large migrant populations. 

 

The private sector is gaining more opportunities. The work report pledges to "support and encourage private investment," aiming to channel capital into infrastructure and public welfare projects. 

 

Lu highlights China's film industry as an example of unmet demand: "The market for cultural IP merchandise linked to hit films like 'Ne Zha' shows enormous potential. The current ‘Ne Zha scarcity' phenomenon isn't a sign of consumption downgrading, but rather a supply shortage in response to strong demand."  

 

The road ahead 

 

China's strategy blends demand-side stimulus with supply-side reforms. The government plans to issue 300 billion yuan in ultra-long special treasury bonds to support trade-in programs, enhance income distribution mechanisms, and refine duty-free policies to stimulate spending.

  

On the supply side, the work report calls for "reducing restrictive measures" to enable broader participation in service provision and foster more diverse consumption scenarios. This could involve more flexible urban management of street vendors, outdoor performances, and public space utilization. 

 

"If structural issues such as limited education slots, healthcare access, and quality services are addressed, China's consumption potential can be fully unlocked," says Professor Chen Zengjing, Vice Dean of School of Mathematics, Shandong University and a CPPCC member.