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SCMP Editorial
Editorial
SCMP Editorial

China’s moves to fuel growth driven by consumption are strategic

Government subsidies for consumer goods can only go so far. Beijing’s first five-year plan to lift household consumption is part of an essential pivot

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People visit a shop on a busy street in Beijing on May 7, 2025. Photo: AFP
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.

Shopaholism may be viewed with disfavour in wealthy nations, but in Beijing, policymakers are probably wishing more of the Chinese populace would catch the bug. The long-sought growth transition from export reliance to domestic consumption has been slow to progress. It’s tough to turn a nation of savers into one of spenders.

The unveiling of a stand-alone five-year plan for consumption, targeting retail sales of 60 trillion yuan (US$8.9 trillion) by 2030, is not merely a quantitative goal, but a declaration of economic determination.

For decades, China’s economic engine has been powered largely by exports – a model that has served the nation well since the early days of its opening up. However, as the global landscape shifts, Beijing has recognised that a sustainable future requires a pivot to domestic demand.

But while recent rounds of government subsidies for consumer goods including electronic devices have provided a welcome boost, they are merely temporary fixes. The short-term lift to retail sales of electronic devices and appliances helped generate over 1.1 trillion yuan in sales in the first half of 2026. But relying indefinitely on such measures is not a viable strategy. To truly invigorate the domestic economy, which has remained largely flat, policymakers must look beyond immediate stimulus and address the fundamental drivers of consumer behaviour.
The electric vehicle market is a case in point. Faced with a softening domestic market, China’s carmakers have turned to sharp discounts, triggering a downward spiral into profit-killing price wars. This phenomenon called “involution” exists in many tech and consumer platform sectors, and the authorities have been trying to discourage it.

An alternative for those carmakers is to expand exports, particularly to Europe. BYD’s exports, for example, surged by nearly 74 per cent in the first half of 2026, even as its domestic sales fell by 38.5 per cent. Geely’s exports shot up sevenfold as sales at home dropped by 15.7 per cent.

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