China Party Chiefs Vow to Boost Innovation, Oh, And Consumption

The heads of China’s Communist Party have said they will increase government investment for people’s livelihoods over the next five years.

Officials told reporters on Friday they would raise the percentage of household consumption of GDP “significantly” over the next five years.

The comments came after China unveiled its outline for economic and other policy goals for 2026-2030 on Thursday, which showed that the leadership prioritised manufacturing and technology-reliance over consumption.

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The country’s tech-focused STAR50 index rose 3% on Friday morning, responding to the outline.

“China should strive for breakthroughs in key technologies,” President Xi Jinping said in an August meeting on the new five-year plan, state media reported on Friday.

He added that the integrated development of education, science and technology talent should be promoted.

While the plan further tilts toward tech innovation and industrial upgrades, policymakers also promised more efforts to boost domestic consumption.

Critics say the Chinese leadership has been overly focused on manufacturing and infrastructure, providing massive subsidies for industrial policies designed to boost production of semiconductors and electric vehicles, rather than jobs, healthcare and social welfare.

Intensifying trade rows with the US, Europe and other nations caused by the country’s industrial ‘overcapacity’, plus a prolonged property crisis, have caused an economic slowdown that has troubled many citizens.

Living standards for a vast amount of the country’s 1.4-billion people are still well under those in the West, with many young people disillusioned about work prospects and its growing elderly population facing such meagre pensions they can often not even afford to retire.

Consumption 20% under global average

China’s household consumption lags global averages by about 20 percentage points of GDP, while debt-driven investment is roughly 20 points ahead.

Given these concerns, the announcements made on Friday were no surprise.

Han Wenxiu, deputy director of the Central Financial and Economic Affairs Commission, told a press conference in Beijing that the first major goal of the five-year plan is to keep economic growth at a “reasonable” range and “significantly” raise the percentage of household consumption of GDP.

But he did not state the figure, according to Reuters.

“Strengthening the domestic market is a strategic underpinning for China’s modernisation … There is room and potential for China to expand its domestic demand,” Zheng Shanjie, head of the National Development and Reform Commission, said.

China’s economic growth slowed to its weakest pace in a year in the third quarter as fragile domestic demand left it heavily reliant on the unexpected humming of its export factories despite US tariffs, stoking concerns about government efforts to address longstanding structural imbalances.

China will plan a number of major policies, reforms and projects and speed up the planning of policy measures for next year to ensure a good start to the 15th five-year plan, according to state television, which cited a cabinet meeting.

The central bank will aim to calibrate the intensity, timing and pace of monetary policy to support stable economic growth and maintain the stable operation of stock, bond and foreign exchange markets, it said in a statement.

Jiang Jinquan, China’s Communist Party research office head, said at the press conference that he expected the country’s GDP to hit 140 trillion yuan ($19.7 trillion) this year, compared with 101.5 trillion yuan during the January-September period.

Xi purges military

Meanwhile, President Xi has been purging senior military appointees, including supporters from the ‘Fujian clique’ who knew him from his many years when he was governor of that coastal province.

Observers say the reshuffle announced on Thursday – ostensibly part of a crackdown on corruption – was a bid to boost public confidence and reassert his control ahead of key party milestones.

These moves come amid speculation that Xi could seek a fourth term in office, so he will still be leading the country in 2029, when the People’s Republic has its 80th anniversary.