China is planning new measures to boost service consumption, aiming to shift away from reliance on investment and exports. Policy advisers stress the need to raise household incomes and strengthen social welfare to achieve success. Leaders aim to increase household consumption’s share of the economy by investing in education, healthcare, and social security.
The services sector in China faces shortages due to underdevelopment and historical bias towards manufacturing. Policymakers are focusing on services consumption potential, with a gradual shift towards a services-led consumption model expected. Chinese households are already spending more on services like elderly care and entertainment as demand for goods plateaus.
China’s economy grew 5% last year by tapping into global goods demand. Retail sales of goods grew by 0.9% in December, while services sales saw a 5.5% increase in 2025. Per-capita services consumption has risen to 46.1% of total spending as China looks to rebalance its economy towards services.
The government is considering expanding consumption subsidies to cover services like elderly care and entertainment. Fiscal support may include subsidies for seniors and vouchers for home-based care. While Beijing remains focused on manufacturing, investors are eager to see more fiscal support for public services.
China faces a significant shortfall in investment in services compared to similar income level economies. The central bank has launched initiatives to support services consumption, but inadequate supply remains a major challenge. With a scarcity of elderly care beds and growing demand, China is working to bridge the gap in services provision.
Many Chinese families are turning to services like elderly care due to changing demographics and weakening filial norms. While some can afford high-end facilities, others on smaller pensions struggle to access affordable care. The government aims to address these challenges by expanding services and boosting household consumption rates.
Read more at Yahoo Finance: Analysis-China can’t make consumers buy goods, so it leans on services to drive economy