China’s consumption drive: targets outpace momentum

China's growth model has historically relied on investment and exports, with industrial policy taking precedence over household demand. However, the nation's consumption drive, as outlined in the 15th Five-Year Plan, aims to address this imbalance by targeting a 3.7% annual growth in retail sales and increasing household consumption's share of GDP to 60 trillion yuan by 2030.

Despite these ambitious goals, recent figures indicate that the shift towards consumption is struggling to materialize, with final consumption accounting for a lower share of GDP growth in 2025 and retail sales of consumer goods growing only 1.1% year-on-year in the first half of the year. The article identifies four key factors contributing to China's subdued consumption performance: weak goods demand, eroding property wealth and weak confidence, job insecurity, and limited policy support.

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