China's President Xi Jinping is emphasizing the importance of domestic demand as the country faces increasing global trade uncertainty. This shift in focus comes as China's export-led growth model encounters significant challenges. Despite a record trade surplus, the country is now prioritizing consumption and investment to drive economic growth.
In a recent speech, Xi highlighted the need to anchor growth in domestic consumption and investment, leveraging China's vast market size. He called for coordinated efforts to boost spending and investment, utilizing the country's 'super-large-scale market' advantages. The primary focus is on improving household livelihoods, stabilizing investment, and fostering sustainable long-term growth.
This strategic shift reflects Beijing's awareness of the volatile external environment. Despite a record trade surplus in 2025, the ongoing tariff tensions with the United States have made policymakers cautious about relying heavily on exports. Rising protectionism and concerns over low-cost Chinese goods have accelerated the need to rebalance growth towards domestic consumption.
China's economy grew by 5% in 2025, with exports compensating for weaker private consumption and a decline in investment, particularly in the property sector. However, officials recognize the sustainability challenges of this imbalanced model, especially with rising geopolitical and trade risks.
To address these issues, Xi has emphasized innovation as a key driver of development, promising to accelerate the growth of new industries. Measures to strengthen household income, including higher wages and pensions, aim to boost consumer spending power. Investment projects directly linked to public welfare will also receive increased attention.
Other priorities include advancing high-quality development, promoting green transformation, continuing economic opening, and addressing structural distortions. Xi has urged officials to curb destructive price competition among firms while stabilizing the property sector and supporting employment for graduates and migrant workers. Despite this, Beijing is not planning a large-scale stimulus surge, opting for a measured approach to sustain growth.
