Boosting investment, consumption twinned tasks

Editor's note: Boosting domestic demand is high on China's economic agenda for the next five years. Wang Yiming, vice-chairman of the China Center for International Economic Exchanges, spoke to People's Daily about what should be done to stimulate both investment and consumption. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

Investment in traditional sectors has weakened in China, but investment in high-tech industries is growing rapidly. The per capita capital stock in the country is still relatively low, especially in areas such as technological innovation, the upgrading of industries, urban renewal, rural infrastructure and public services. There is significant investment potential in these areas.

New growth impetus is developing in service consumption, with service retail sales increasing by 5.4 percent year-on-year in the first 11 months of 2025. In 2026, the country plans to increase incomes across both urban and rural areas and advance special initiatives to boost consumption, further unleashing this potential.

The investment structure needs to be optimized and adjusted to adapt to the changes in the economy. In general, more investment is required for well-rounded human development. Efforts are needed to increase government investment in projects which aim to improve people's well-being. Investment is also necessary to shore up weaknesses in technological innovation and the low-carbon transition.

Higher investment in these areas will help change the development pattern, improve the economic structure and create new growth momentum. For example, by increasing investments to encourage the development of new technologies and products, including artificial intelligence, ultrahigh-definition video and humanoid robots, the country could unleash the potential of new forms of consumption, such as digital consumption and green consumption. Additionally, increased investment in the service industry, further relaxation of restrictions on investment in education, health care, tourism and eldercare, and an increase in the supply of high-quality services could also boost consumption demand.

The private sector is crucial for stabilizing investment. Efforts are needed to not only implement short-term policies, but also improve institutions and mechanisms to stimulate private investment. It is necessary to uphold fair competition, clear the obstacles that restrict private investment and encourage private enterprises to participate in major projects in areas such as railways and nuclear power. Private investment in high technologies and the service industry should also be encouraged.

A notable increase in household consumption is one of the major goals for the country during the 15th Five-Year Plan (2026-30) period. China's per capita GDP has exceeded $13,000, and the consumption structure of the country is undergoing a transformation. People's spending on basic items for survival now accounts for a smaller share of their overall consumption. They are now allocating more to "developmental consumption" — expenses on personal development. The government needs to increase its spending on public services to encourage developmental consumption in the areas of education and health.

On the supply side, consumption of goods is relatively saturated, while consumption of services is increasing at a fast clip. Currently, there is an insufficient supply of high-quality and diverse services. It is therefore necessary to relax the entry restrictions on investors and let services be priced in a reasonable manner to encourage more private investors to join the service industry.