China Extends Demand Support as Policy Shifts to Services

China Sets 2026‑2030 Plan to Lift Consumption Share

China’s state planner has outlined plans for a new round of policies from 2026 to 2030 aimed at boosting domestic demand and correcting what it calls a “prominent” imbalance between strong supply and weak demand. Leaders have pledged to “significantly” increase household consumption’s share of the economy over the next five years, though no numerical target has been disclosed. The National Development and Reform Commission (NDRC) said services will become a key focus as Beijing works to rebalance growth away from its heavy reliance on exports and industrial output.

Wang Changlin, vice head of the NDRC, told a press conference that weak demand is a major issue “in the current economic operation.” China’s economy grew 5% last year, in line with the government’s goal, helped by booming exports that offset soft domestic spending. Official data show industrial output rose 5.9% in 2025, clearly ahead of the 3.7% growth in retail sales, underscoring the gap between production and consumer demand that policymakers now say they want to close.

The planned 2026‑2030 measures will come on top of near‑term steps already announced to support households and smaller companies. Authorities have indicated they see consumption as central to sustaining growth in the face of an aging population and more volatile external demand, and are seeking to give households greater confidence to spend rather than save.

Subsidies Extended to Support Consumers and Small Firms

China’s finance ministry said it will extend interest subsidies for consumers, consumer‑service enterprises and businesses that need equipment upgrades through the end of 2026, in an effort to revive domestic demand. The ministry said the extension is intended to “further boost consumption and expand domestic demand, continue to reduce the cost of personal consumer credit, and enhance residents’ willingness to spend.”

In parallel, Beijing will introduce interest subsidies for up to two years on loans issued from this year to micro, small and medium‑sized private enterprises. Officials say the goal is to ease financing costs for smaller private firms, which are a major source of employment and income growth. To further encourage private capital spending, the ministry also announced a new guarantee plan totaling 500 billion yuan (about $71.83 billion) over two years to support private investment projects.

These financial measures build on trade‑in subsidies first deployed earlier to support purchases of items such as electric vehicles and appliances. In December, China allocated 62.5 billion yuan (about $8.98 billion) in special treasury bond funds to back its 2026 consumer trade‑in program for appliances and new‑energy vehicles, indicating that targeted subsidies remain a core tool in its demand‑support strategy.

Policy Focus Shifts From Goods to Services

While Beijing will continue to back big‑ticket goods such as electric vehicles through trade‑in incentives, officials say the emphasis of demand‑expansion policies is moving toward services. Zhou Chen, an NDRC official, said the government will keep using trade‑in subsidies but that “the services sector has now become a key focus in efforts to expand domestic demand.”

Policymakers point to areas like elderly care, healthcare and leisure as segments with substantial room for growth. By prioritizing services, they aim to both raise household consumption’s share of GDP and open new channels for private investment. The shift also reflects recognition that traditional drivers such as property and heavy industry face structural headwinds, while services could absorb labor and support more stable, domestically driven growth.