As Beijing gathers public input on China’s next five-year plan – a mission statement for the next half-decade of economic and social policy – how best to bolster domestic consumption has emerged as a topic of considerable debate as the country seeks new avenues for growth amid a murky landscape for global trade.
One point of contention among scholars and other influential thinkers is whether to set measurable consumption targets, in a similar fashion to other headline benchmarks like gross domestic product growth.
Some have called for indicators such as the household consumption rate – the share of consumer spending in GDP – to be written into the blueprint, while others argue that such metrics are not operationally feasible as policy goals.
Among those in favour is Chang Xiuze, an economist with the Academy of Macroeconomic Research under the National Development and Reform Commission – the country’s top economic planner – who has made this proposal on various occasions.
“From the perspective of the national strategy to expand domestic demand and the lives of ordinary people, could the ‘household consumption rate’ be listed separately in the 15th five-year plan as a national ‘monitoring and assessment indicator’?” he wrote after a research trip to the northeastern province of Liaoning in June.
In the note, compiled last month by the China Academy of Northeast Revitalisation think tank – where Chang serves as deputy director of the expert committee – he noted China’s household consumption rate was a “low” 39.6 per cent in 2023.
Similarly, Jin Keyu, a professor at Hong Kong University of Science and Technology’s school of business and management, said it would be “fantastic” if consumption became a “yardstick” for local governments to use as a measurement of success at a World Economic Forum event in June.
However, Ding Shuang, chief Greater China economist at Standard Chartered Bank, said making the consumption rate a mandatory target would be an “impractical” task.
“There are too many factors influencing consumption, and no direct means to ensure it is achieved. It’s not something local governments can reach simply through their own efforts,” he said.
“The idea of setting the consumption rate as a target is a bit too academic, and in practice it would be difficult to implement.”
Instead of an overall consumption goal, Ding proposed concrete steps to remove obstacles to spending. For instance, a stable mechanism for income growth could be established, and controllable benchmarks could be set.
“These indicators,” Ding said, naming civil servant salaries and minimum income standards as examples, “can also send a demonstration effect to the market, which would in turn influence overall income levels across the economy.”
Domestic consumption is high on the policy agenda this year – a necessary counter to heightened external pressures under the second term of US President Donald Trump – with Beijing already rolling out a 30-point policy package and allocating 300 billion yuan (US$41.73 billion) to a massive consumer goods trade‑in programme.
The country’s five-year plans – the forthcoming edition is the 15th – are strategic documents for medium-term development, setting out Beijing’s priorities through a set of quantifiable goals.
These targets are usually divided into two categories: binding, which must be met and are often tied to resources, the environment or public welfare; and indicative, which are guiding objectives without mandatory enforcement.
The next plan is set to be discussed at the Communist Party’s fourth plenary session in October, which will gather the members of its Central Committee.
In the run-up to the meeting, President Xi Jinping has stressed the need to study and absorb public opinion as part of the plan’s formulation, after a three-month solicitation campaign gathered more than 3.11 million suggestions from the public, state news agency Xinhua reported on Monday.