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Commentary: Can China grow from within?
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Summary
Advertisement Commentary Commentary: Can China grow from within? Whereas China’s real consumption stands at roughly 50 per cent to 80 per cent of US levels – broadly consistent with a middle-income OECD economy – service consumption lags significantly behind , falling short of developed economy levels by an estimated 15 to 20 percentage points. Commentary: In trade’s ‘law of the jungle’, the winners are clear A STRUCTURAL AND STRATEGIC IMPERATIVE Expanding China’s capital markets is not only a financial imperative, but also a structural and strategic one, as it is essential to reducing reliance on external capital. But, as the 15th Five-Year Plan also recognises, expanding China’s capital markets will require deep institutional reforms to improve initial public offering systems, strengthen corporate governance, encourage dividends and buybacks, and mobilise “patient capital” from pension funds and insurers.
## Summary
Advertisement Commentary Commentary: Can China grow from within? Whereas China’s real consumption stands at roughly 50 per cent to 80 per cent of US levels – broadly consistent with a middle-income OECD economy – service consumption lags significantly behind , falling short of developed economy levels by an estimated 15 to 20 percentage points. Commentary: In trade’s ‘law of the jungle’, the winners are clear A STRUCTURAL AND STRATEGIC IMPERATIVE Expanding China’s capital markets is not only a financial imperative, but also a structural and strategic one, as it is essential to reducing reliance on external capital. But, as the 15th Five-Year Plan also recognises, expanding China’s capital markets will require deep institutional reforms to improve initial public offering systems, strengthen corporate governance, encourage dividends and buybacks, and mobilise “patient capital” from pension funds and insurers.
## Article Content
Advertisement
Commentary
Commentary: Can China grow from within?
There is now only one engine capable of sustaining growth at the scale Beijing requires, says economics professor and author Keyu Jin.
An employee works on the production line of Nio electric vehicles at a JAC-NIO manufacturing plant in Hefei, China, Aug 28, 2022. China Daily via REUTERS /File Photo
Keyu Jin
Keyu Jin
04 Apr 2026 06:00AM
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LONDON: China manifests a striking paradox. It is among the world’s most dynamic technological powers, producing breakthroughs in artificial intelligence, electric vehicles and advanced manufacturing at an accelerating pace, yet economic growth continues to slow.
The reason is no mystery. As
the government’s latest Five-Year Plan (2026 to 2030)
recognises, China is experiencing a structural transition, not a cyclical slowdown. The old model is giving way to a new one, which has yet to take hold.
This transition is about more than economics. It reflects a deeper objective: strategic autonomy. The question is no longer simply whether China can grow, but whether it can grow on its own terms.
A system that depends heavily on external demand, foreign capital or imported technology is inherently exposed – a reality that recent energy shocks have thrown into sharp relief. So, the 15th Five-Year Plan aims to reduce structural dependencies.
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The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom. But it was inadequate at raising demand and welfare – and it has now reached its limits.
While advanced technology sectors are strategically vital, their macroeconomic weight is limited. High-end manufacturing, for example, accounted for roughly 6 per cent of GDP last year and contributes relatively little to local government revenues
compared
to the property sector it is meant to replace.
SERVICE CONSUMPTION IS LAGGING
There is now only one engine capable of sustaining growth at the scale China requires: consumption. For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
The gap between China’s current consumption levels and global norms implies trillions of dollars in unrealised demand. The divergence is particularly pronounced in services.
Whereas China’s real consumption stands at roughly 50 per cent to 80 per cent of US levels – broadly consistent with a middle-income OECD economy – service consumption
lags significantly behind
, falling short of developed economy levels by an estimated 15 to 20 percentage points.
The 15th Five-Year Plan marks the Chinese government’s most concerted effort yet to address this imbalance – though results will take time to emerge. At its core is a
new doctrine
: boosting domestic demand by investing in people.
Start with pensions. As it stands, social support in China is distributed unevenly, with rural pensions averaging only around US$35 per month – less than 7 per cent of urban retirees’ benefits. But rural pensions are set to rise to about US$85 per month within three years and to some US$140 per month within five years. Some
estimates
suggest that this change alone could ultimately lift consumption by 5 to 10 percentage points of GDP.
Related:
Commentary: China is quietly exiting its deflationary era
Commentary: The global narrative is shifting in favour of China – don’t misread it
But this is just a first step. Given the constraints on consumption – weak income expectations, high precautionary savings and lingering balance-sheet pressures – persuading Chinese households to spend will depend less on delivering short-term stimulus than on improving the distribution of income, security and opportunity across the economy. This is why China will have to shift the focus of its investments from physical capital to people.
Recognising this, the 15th Five-Year Plan aims to expand the scope of
free education
and increase the number of years of compulsory
---
## Expert Analysis
### Merits
- CNA Games Guess Word Crack the word, one row at a time Buzzword Create words using the given letters Mini Sudoku Tiny puzzle, mighty brain teaser Mini Crossword Small grid, big challenge Word Search Spot as many words as you can Show More Show Less The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom.
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- Strong domestic demand offers a degree of insulation from external shocks, and together with developed capital markets, it can go a long way toward strengthening autonomy.
### Areas for Consideration
- CNA Games Guess Word Crack the word, one row at a time Buzzword Create words using the given letters Mini Sudoku Tiny puzzle, mighty brain teaser Mini Crossword Small grid, big challenge Word Search Spot as many words as you can Show More Show Less The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom.
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
### Implications
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
- The 15th Five-Year Plan marks the Chinese government’s most concerted effort yet to address this imbalance – though results will take time to emerge.
- Some estimates suggest that this change alone could ultimately lift consumption by 5 to 10 percentage points of GDP.
### Expert Commentary
This article covers china, consumption, per topics. Notable strengths include discussion of china. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1412.
Advertisement Commentary Commentary: Can China grow from within? Whereas China’s real consumption stands at roughly 50 per cent to 80 per cent of US levels – broadly consistent with a middle-income OECD economy – service consumption lags significantly behind , falling short of developed economy levels by an estimated 15 to 20 percentage points. Commentary: In trade’s ‘law of the jungle’, the winners are clear A STRUCTURAL AND STRATEGIC IMPERATIVE Expanding China’s capital markets is not only a financial imperative, but also a structural and strategic one, as it is essential to reducing reliance on external capital. But, as the 15th Five-Year Plan also recognises, expanding China’s capital markets will require deep institutional reforms to improve initial public offering systems, strengthen corporate governance, encourage dividends and buybacks, and mobilise “patient capital” from pension funds and insurers.
## Article Content
Advertisement
Commentary
Commentary: Can China grow from within?
There is now only one engine capable of sustaining growth at the scale Beijing requires, says economics professor and author Keyu Jin.
An employee works on the production line of Nio electric vehicles at a JAC-NIO manufacturing plant in Hefei, China, Aug 28, 2022. China Daily via REUTERS /File Photo
Keyu Jin
Keyu Jin
04 Apr 2026 06:00AM
Bookmark
Bookmark
Share
Telegram
Set CNA as your preferred source on Google
Add CNA as a trusted source to help Google better understand and surface our content in search results.
Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
LONDON: China manifests a striking paradox. It is among the world’s most dynamic technological powers, producing breakthroughs in artificial intelligence, electric vehicles and advanced manufacturing at an accelerating pace, yet economic growth continues to slow.
The reason is no mystery. As
the government’s latest Five-Year Plan (2026 to 2030)
recognises, China is experiencing a structural transition, not a cyclical slowdown. The old model is giving way to a new one, which has yet to take hold.
This transition is about more than economics. It reflects a deeper objective: strategic autonomy. The question is no longer simply whether China can grow, but whether it can grow on its own terms.
A system that depends heavily on external demand, foreign capital or imported technology is inherently exposed – a reality that recent energy shocks have thrown into sharp relief. So, the 15th Five-Year Plan aims to reduce structural dependencies.
CNA Games
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Show More
Show Less
The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom. But it was inadequate at raising demand and welfare – and it has now reached its limits.
While advanced technology sectors are strategically vital, their macroeconomic weight is limited. High-end manufacturing, for example, accounted for roughly 6 per cent of GDP last year and contributes relatively little to local government revenues
compared
to the property sector it is meant to replace.
SERVICE CONSUMPTION IS LAGGING
There is now only one engine capable of sustaining growth at the scale China requires: consumption. For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
The gap between China’s current consumption levels and global norms implies trillions of dollars in unrealised demand. The divergence is particularly pronounced in services.
Whereas China’s real consumption stands at roughly 50 per cent to 80 per cent of US levels – broadly consistent with a middle-income OECD economy – service consumption
lags significantly behind
, falling short of developed economy levels by an estimated 15 to 20 percentage points.
The 15th Five-Year Plan marks the Chinese government’s most concerted effort yet to address this imbalance – though results will take time to emerge. At its core is a
new doctrine
: boosting domestic demand by investing in people.
Start with pensions. As it stands, social support in China is distributed unevenly, with rural pensions averaging only around US$35 per month – less than 7 per cent of urban retirees’ benefits. But rural pensions are set to rise to about US$85 per month within three years and to some US$140 per month within five years. Some
estimates
suggest that this change alone could ultimately lift consumption by 5 to 10 percentage points of GDP.
Related:
Commentary: China is quietly exiting its deflationary era
Commentary: The global narrative is shifting in favour of China – don’t misread it
But this is just a first step. Given the constraints on consumption – weak income expectations, high precautionary savings and lingering balance-sheet pressures – persuading Chinese households to spend will depend less on delivering short-term stimulus than on improving the distribution of income, security and opportunity across the economy. This is why China will have to shift the focus of its investments from physical capital to people.
Recognising this, the 15th Five-Year Plan aims to expand the scope of
free education
and increase the number of years of compulsory
---
## Expert Analysis
### Merits
- CNA Games Guess Word Crack the word, one row at a time Buzzword Create words using the given letters Mini Sudoku Tiny puzzle, mighty brain teaser Mini Crossword Small grid, big challenge Word Search Spot as many words as you can Show More Show Less The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom.
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- Strong domestic demand offers a degree of insulation from external shocks, and together with developed capital markets, it can go a long way toward strengthening autonomy.
### Areas for Consideration
- CNA Games Guess Word Crack the word, one row at a time Buzzword Create words using the given letters Mini Sudoku Tiny puzzle, mighty brain teaser Mini Crossword Small grid, big challenge Word Search Spot as many words as you can Show More Show Less The investment-driven and export-led model that powered Chinese growth for decades was highly effective at scaling up supply, delivering extraordinary results through a time of rapid globalisation, favourable demographics, surging urbanisation and a property boom.
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
### Implications
- For a country that has managed to overcome powerful constraints to innovation – a record exemplified by Huawei’s resilience and the rise of leading AI players like DeepSeek – getting households to consume more might not seem like a difficult task.
- But given that underconsumption has long been embedded in the Chinese system, it might be the toughest challenge China has faced.
- The 15th Five-Year Plan marks the Chinese government’s most concerted effort yet to address this imbalance – though results will take time to emerge.
- Some estimates suggest that this change alone could ultimately lift consumption by 5 to 10 percentage points of GDP.
### Expert Commentary
This article covers china, consumption, per topics. Notable strengths include discussion of china. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1412.
china
consumption
per
capital
commentary
growth
fast
five
