Beijing pivots toward consumption-led growth as export reliance faces mounting global headwinds.
While Chinese President Xi Jinping spoke on Sunday, take note that Chinese markets are closed all this week:
Summary:
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Xi pivots toward domestic demand, calling consumption and investment the “main driver” of growth.
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China bracing for global uncertainty, despite a record trade surplus amid US tariff tensions.
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Exports masked weak domestic momentum in 2025, with 5% GDP growth supported by strong semiconductor shipments.
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Policy focus on incomes and innovation, including higher pensions, livelihood-linked investment and new growth industries.
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Measured fiscal support ahead, with no large stimulus planned, but continued efforts to stabilise property and employment.
Chinese President Xi Jinping has underscored the need to make domestic demand the primary engine of China’s economic growth, signalling a strategic pivot as global trade uncertainty intensifies.
In remarks delivered at December’s Central Economic Work Conference and published on Sunday, Xi stressed that growth must be anchored in consumption and investment at home. He called for coordinated efforts to stimulate spending and expand investment while fully utilising what he described as the advantages of China’s “super-large-scale market.” Improving household livelihoods, stabilising investment and fostering sustainable long-term growth were positioned as central priorities.
The policy blueprint reflects Beijing’s expectation of a more volatile external environment. China posted a record trade surplus last year despite the ongoing tariff conflict with the United States, but policymakers appear increasingly cautious about relying heavily on export-led expansion. Rising protectionism and pushback from trading partners over low-cost Chinese goods have heightened the urgency of rebalancing growth toward domestic consumption.
China’s economy expanded 5% last year, with exports offsetting softer private consumption and a sharp downturn in investment, particularly in property. However, officials acknowledge that such an imbalanced model may prove difficult to sustain as geopolitical and trade risks mount.
Xi reiterated that innovation will remain central to the country’s development strategy, pledging to accelerate the cultivation of new growth drivers and emerging industries. At the same time, measures aimed at strengthening household income — including higher wages and pensions for rural and urban residents — are intended to reinforce consumer spending power. Investment projects tied directly to public welfare are also set to receive greater emphasis.
Additional priorities include advancing high-quality development, promoting green transformation, continuing economic opening, and addressing structural distortions. Xi urged officials to curb destructive price competition among firms — part of the so-called “anti-involution” campaign — while also stabilising the property sector and supporting employment for graduates and migrant workers.
Although Beijing has signalled continued policy support, it is not preparing a large-scale stimulus surge. Authorities plan to maintain what they describe as a necessary fiscal deficit and steady government spending into 2026, suggesting a calibrated rather than aggressive approach to sustaining growth.
