China plans new measures to spur consumption for next five years

BEIJING, Jan 20 (Reuters) – China plans to roll out new policies from 2026 to 2030 to spur domestic consumption and tackle “prominent” imbalances in supply and demand, with the services sector becoming a key focus, the country’s state planner said on Tuesday.

Chinese leaders have pledged to “significantly” lift household consumption’s share of the economy over the next five years, though they have not given a specific target. 

“The issue of having strong supply but weak demand in the current economic operation is indeed a prominent problem,” Wang Changlin, vice head of the National Development and Reform Commission (NDRC), said at a press conference.

China’s economy grew 5% last year, matching the government’s target, as a boom in Chinese exports offset weak domestic consumption, a balancing act that is expected to be difficult to replicate.

Industrial output rose 5.9% in 2025, outpacing the 3.7% growth in retail sales, underscoring the supply-demand imbalance.

On Tuesday, China’s finance ministry said it would extend interest subsidies for consumers, consumer-service enterprises and businesses in need of equipment upgrades to the end of 2026 to revive softening domestic demand.

The extension seeks to “further boost consumption and expand domestic demand, continue to reduce the cost of personal consumer credit, and enhance residents’ willingness to spend,” the finance ministry said.

The ministry will also roll out interest subsidies for up to two years for loans issued to micro, small and medium-sized private enterprises from this year. It also introduced a guarantee plan totalling 500 billion yuan ($71.83 billion) over two years for private investment.

Zhou Chen, an official at the NDRC, said the government would continue to use trade-in subsidies to support consumption of goods like electric vehicles, but its focus was shifting toward services.

Officials say services, including elderly care, healthcare and leisure, offer substantial room for growth.

“The services sector has now become a key focus in efforts to expand domestic demand,” Zhou said.

In December, China deployed 62.5 billion yuan ($8.98 billion) in special treasury bond funds to support its 2026 consumer trade-in scheme for appliances and new-energy vehicles.

($1 = 6.9606 Chinese yuan renminbi)

(Reporting by Kevin Yao and Ziyi Tang; Editing by Kate Mayberry and Thomas Derpinghaus)