China: A Five-Year Consumption Plan Towards a Consumption-Driven Economy

■ The plan proposes targets such as reaching approximately 60 trillion yuan in total retail sales of consumer goods by 2030 and increasing the proportion of service consumption, to build a more stable economic foundation. 
 
The State Council approved specific measures formulated by the National Development and Reform Commission (NDRC) and the Ministry of Commerce based on the goals of transforming the economy towards a consumption-led model as outlined in the "15th Five-Year Plan (2026-2030)" adopted in March of this year, and released its summary (hereinafter referred to as the "Consumption Plan") on the 13th. 
 
In the "15th Five-Year Plan," "expanding domestic demand and strengthening the domestic economic cycle" is positioned as a crucial task second only to "high-quality development." The plan proposes to leverage the advantages of the "super-large domestic market" and increase per capita income to achieve a transformation of the economic growth model from one reliant on investment and exports to one centered on consumption. The Consumption Plan proposes six specific measures: (1) expanding the service consumption market and improving its quality; (2) promoting the upgrading of commodity consumption, including popularizing high-tech products; (3) cultivating new consumption markets such as digital consumption, green consumption, experiential consumption, and inbound consumption; (4) improving the consumption capacity of the household sector by strengthening income, employment, and social security; (5) improving the construction of consumption infrastructure and expanding opening up to the outside world; and (6) reforming unreasonable systems and regulatory measures. The plan also proposes that by 2030, the final year of the plan, the total retail sales of consumer goods will reach approximately RMB 60 trillion. This means an increase of about 20% compared to RMB 50 trillion in 2025, which is a relatively realistic level that can be achieved without relying on additional expansionary policies and according to the economic growth targets set by the government. In addition, although no specific numerical targets are set, the plan also proposes to increase the proportion of service consumption in residents' consumption expenditure. 
 
Most of the specific measures in the six major areas continue the content already proposed in previous documents such as the 15th Five-Year Plan. However, prioritizing the expansion of the service consumption market and setting quantitative targets for total retail sales of consumer goods reflects the Chinese government's recognition that to build an economic system centered on domestic demand, similar to that of developed countries, it is essential to expand the scale of the service consumption market. Simultaneously, it demonstrates the Chinese government's policy intention to achieve more stable economic growth unaffected by external factors. Against the backdrop of escalating trade frictions and geopolitical tensions among Western countries led by the United States, this plan also reflects China's accelerated preparations to address the risk of economic fragmentation. 
 
On the other hand, the plan does not directly address the excess capacity and excessive capital stock accumulated during the past investment-driven high-speed growth; regarding adjustments to the real estate market that may constrain consumption, it is limited to previously proposed policy measures, including government-provided affordable housing, expansion of the rental housing market, and reform of the housing provident fund system. The plan does not reflect a proactive policy orientation to address the side effects of capital stock adjustments during economic restructuring, and therefore may indirectly inhibit the improvement of residents' consumption capacity and the further expansion of the domestic consumer market.