China Pivots to Consumption-Led Growth to Fight Deflationary Drag, Economist Says
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China is promoting a new economic development model driven by domestic demand and consumption, a move a former senior economic official described as a new direction aimed at steering the country away from its decades-old growth formula.
The Communist Party’s proposals for the 15th Five-Year Plan (2026-2030) signal a move away from a government-led development model centered on property, investment and debt, which is no longer sustainable, said Yang Weimin, a former deputy director of the general office of the Central Financial and Economic Affairs Commission, during a recent speech at a forum.
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- China is shifting to an economic model focused on domestic demand and consumption, moving away from property- and investment-led growth.
- Household consumption fell from 45.7% (2001) to 39.2% (2024) of total demand, while income inequality remains a major constraint.
- The government aims to tackle structural issues and develop high-end consumer industries to address deflationary pressures and boost nominal growth.
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