Editor's note: 2026 marks the beginning of the 15th Five-Year Plan, and expanding domestic demand and boosting consumption will be key priorities for the year. Data shows that in 2025, domestic demand contributed over 67% to economic growth, with consumption contributing 52%. Notably, the growth of service consumption surpassed that of retail sales of goods, indicating significant growth potential.
【Anchor】Hello everyone, welcome to DDN Business Insider. I am Yunfei Zhang. This year marks the beginning of the "15th Five-Year Plan," which explicitly sets the core goal of "significantly increasing the household consumption share (of GDP)." Recently released data indicate that domestic demand will contribute over 67% to economic growth by 2025, with consumption alone accounting for 52%. What growth potential exists within the consumption sector, and what new trends are emerging? Today, we have Liu Tao, senior researcher at Guangkai Chief Industry Research Institute, and Cheng Bolin, vice president of the Low-Altitude Economy Committee of the China Information Association, to provide commentary and analysis. Hello, everyone!
First, let's take a look at the current state of consumption development. As mentioned, data for the full year 2025 shows that domestic demand contributed over 67% to economic growth, with consumption accounting for 52%, representing a significant portion of the economy. This is unprecedented. Mr. Liu, what's your perspective on the current level of domestic consumption development? Are there any new growth points that can support consumption's contribution to the economy?
Good, host. Overall domestic consumption in 2025 is expected to show a relatively stable growth trend. First, looking at the external environment, recent years have seen global supply chain disruptions due to the pandemic and tariff conflicts initiated by the Trump administration. These disruptions have highlighted the importance and necessity of accelerating the construction of a strong domestic market in our country. Secondly, regarding internal growth potential, there is still a gap of 10 to 30 percentage points in the resident consumption rate compared to developed countries, especially with service consumption being significantly low. In the future, consumption will play an increasingly active role in stabilizing the economy.
In 2026, there are several favorable conditions for consumption growth in our country. First, proactive policy support is in place. Second, steady growth in resident income will bolster consumption capacity. The "14th Five-Year Plan" clearly proposes the implementation of an urban-rural resident income increase plan to synchronize resident income growth with economic development. By 2026, the real growth rate of per capita disposable income in our country is expected to reach 5% or even higher.
Third, by 2026, there will be an evident increase in service consumption scenarios. For instance, looking ahead to tourism consumption from 2024 to 2025, the addition of potential holidays could drive an increase in resident consumption expenditure by 250 to 300 billion yuan.
Fourth, consumption infrastructure will continue to improve. In 2026, our country will continue to accelerate the construction of charging stations, county-level commercial systems, cold chain logistics, smart business districts, and so on.
Lastly, direct stabilization of the real estate market is anticipated. The government will focus on stabilizing the real estate market in 2026.
Mr. Cheng, what new characteristics and changes do you see in China's current-stage consumption market, and are there any concerns?
First, the government attaches great importance to stimulating domestic demand and has rolled out a series of pro-consumption policies—automobile-purchase subsidies, for example—that have effectively lifted spending. Emerging consumption segments are performing well; cultural and tourism outlays keep rising and have become an important engine of growth. Meanwhile, China's Engel coefficient keeps falling, so the share of food in total consumption is shrinking—a clear sign that living standards are improving. That said, we should stay alert to potential headwinds: China is already an aging society, and the simultaneous rise in the share of seniors and the decline in birth rates are dampening consumption momentum.
OK, looking at specific sectors, retail sales of consumer services rose 5.5% year-on-year, outpacing sales of goods. Yet by international standards China's service-consumption share still lags far behind that of developed economies. Mr. Liu, where do you see further upside for service consumption, and how can that potential be unlocked?
From a policy standpoint, 2026 will be devoted to expanding the supply of high-quality consumer goods and services, incubating new growth points and creating fresh consumption scenarios.
First, we will roll out targeted pro-consumption measures, including the Urban–Rural Resident Income Boost Program. The scope of these subsidies is continually expanding. In addition to continued incentives for scrapping and replacing old vehicles, subsidies for new digital purchases have been broadened to include digital and smart products. By combining these broader subsidies with proactive tax, social-security and transfer-payment policies, we can raise household income through multiple channels and better align public-welfare objectives with consumption promotion.
Second, we will focus on cultivating new scenarios and business models in consumer services—cloud entertainment, online education, smart health management and other forms of digital service consumption, as well as culture-led experiences such as intangible-heritage tours, rural tourism and sports–travel integration.
Mr. Cheng, you are an expert on the low-altitude economy—an emerging service-consumption format we have been hearing a lot about lately. Where do you see the upside and headroom for service consumption in China, and how should that potential be tapped?
First, household income has to be lifted through every available channel. Next, new forms of consumption will be the main lever for revitalizing spending. Although China's services-trade deficit has narrowed in recent years, it is still large; the deficit in travel-related services alone is close to US $100 billion. The chief reasons are under-sized tourist infrastructure and inadequate supporting supply—food & beverage, hospitality, entertainment, etc.
The low-altitude economy is precisely one of those new levers. It covers aerial sports, aviation culture, low-altitude sightseeing, "flying classrooms" and more, all of which speak to emerging consumer needs. To unlock it we must scrap legacy rules that suppress demand and free the sector to grow. At present China operates just over 3,000 general-aviation aircraft, versus roughly 240,000 in the United States—ample proof of the runway ahead. We need to scale low-altitude manufacturing, enrich consumption scenarios and make better use of available airspace.
Alright. Upgrading and transforming consumption has been a standing topic for years. Against the backdrop of the 15th Five-Year cycle, will 2026 mark the start of a new, longer wave of transformation?
China's services sector still has huge room to move. Currently, there is a trade deficit of several hundred billion dollars in service trade compared to product trade. If we strategically position ourselves, service trade has the potential to achieve a surplus. For example, addressing multifaceted transportation needs by developing electric vertical takeoff and landing fixed-wing aircraft can alleviate urban short-distance travel issues and enrich consumption offerings.
To revive demand and power growth we must focus on three keys:
First, ensuring sufficient employment to increase residents' incomes and solidify the consumption base.
Second, increasing effective supply to open new consumption channels.
Third, harness new industries to deliver products and services that meet emerging needs.
Through a series of measures, we can not only effectively stimulate consumption but also promote sustained rapid and healthy economic development.
When it comes to consumption, consumers are often concerned about aspects like prices and the health of the market environment. Last week, the National Development and Reform Commission conveyed an important message about the comprehensive rectification of "involutionary"competition.Mr. Liu, how do you interpret this shift, and what changes will it bring to the consumption environment?
I believe this terminology not only has significant policy guidance but also reflects a profound adjustment in our economic governance logic. We can understand this change and the new phase it signifies from three dimensions.
The first dimension involves the shift from price competition to value competition. Price competition typically refers to businesses undercutting prices, even below cost, to grab market share. This can lead to profit compression across industries, stifled innovation, and resource misallocation. A quintessential example is the losses seen in sectors like electric vehicles and photovoltaics, where companies sell at a loss. In contrast, value competition emphasizes winning the market by improving product quality, technological content, brand premium, and post-sale services, rather than relying solely on low prices. This shift requires companies to focus on effective supply and real demand, promoting industry upgrading rather than merely expanding production capacity.
The second dimension relates to the characteristics of the new phase of anti-involution that will emerge in 2026. These new features include a shift from "post-correction" to "pre-regulation." The government may encourage investments through planned investment recruitment, employing positive and negative lists to preemptively block local blind spots that lead to excessive project launches, thus avoiding resource waste from building first and tearing down later. Another characteristic is the transition from "industry self-discipline" to government-led structural emergence. In the past, we relied on businesses to regulate themselves, for instance, by cutting production. Now, we may see a more significant role for policy departments such as the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Ministry of Finance collaborating to advance capacity governance.
As "anti-involution" enters this new phase, what supportive measures can we expect to be introduced? What does this mean for producers and the entire industry, Mr. Liu?
Based on the policies we've seen, I anticipate that in 2026, some substantive policy measures will be introduced. These include developing guidelines for capacity governance in key industries such as electric vehicles, photovoltaics, energy storage, and AI computing—sectors that are currently hot. There will likely be certain capacity utilization thresholds set, with new projects below the expected values not receiving approval.
Secondly, there will be a strengthening of price regulation and enforcement against unfair competition. For companies that continue to sell below cost, antitrust or anti-dumping investigations will be initiated, and an abnormal low-price warning mechanism will be established.
Third, the local performance evaluation mechanism will be reformed. This means reducing the weight of GDP and investment growth while increasing the emphasis on metrics such as energy consumption per unit of value added, R&D investment intensity, and the quality of corporate profits. Once we enter this new phase, the market environment will see positive changes such as optimized resource allocation, enhanced entrepreneurial innovation vitality, recovering industry profits, and a standardized market order.
Yes, Mr. Cheng, what's your perspective?
As the anti-involution efforts enter a new phase, we must work on improving the market environment by enforcing higher safety standards. This can effectively help clean up the market environment, raise market entry barriers, and prevent substandard products from entering the market, ensuring a true survival of the fittest that meets consumer demands. This is key to enhancing effective supply and satisfying user needs.
Currently, we are entering a stage of high-quality development. The anti-involution work must align with the requirements of high-quality development, aiming to purify the market and elevate fundamental product standards. A multi-pronged approach to combat involution will facilitate the economy's transition into a phase of sustained, rapid, and healthy development.
【Anchor】OK, thank you to all the guests. That's all for this episode. Remember to follow us on YouTube or download our APP. I'm Yunfei Zhang, thanks for watching, and see you next time.
Anchor: Laura Cheung | Edited: Kelly Yang, Laura Cheung, Rachel Liu | Translate: Kato Ip | Proofread: Chris Liu
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