Citi: New economy reshaping China's growth beyond property and infrastructure

China's growth narrative is undergoing a structural shift as the new economy gains scale and traction, challenging long-held assumptions about the country's reliance on property and infrastructure.

The draft outline of the 15th Five-Year Plan (2026-2030) for national economic and social development proposes raising the value added of core digital economy industries to 12.5 percent of GDP, according to a government work report submitted Thursday to China's top legislature for deliberation.

Yu Xiangrong, head of Greater China Economics at Citi, argues that the macroeconomic weight of emerging industries has reached a tipping point. While skeptics maintain that the new economy, though dynamic, remains too small to offset drag from the old economy, Yu contends that this view is increasingly outdated.

By the narrowest measure, the real estate sector's share of GDP fell below 6 percent last year, while information services, a key component of the new economy, now account for more than 5 percent of GDP. Taking current trends into account, Yu estimates that by 2027 the information services sector could surpass real estate in terms of economic weight. Such a crossover would mark a symbolic and structural turning point in China's growth model.

A broader accounting reinforces the shift. At its peak, real estate's direct and indirect contribution to GDP approached 30 percent. Citi's estimates show that this combined contribution fell to around 13 percent last year. Meanwhile, the "three new" economy — encompassing new industries, new business formats and new business models — has risen to 18 percent of GDP, exceeding real estate's overall contribution by roughly 5 percentage points.

If policymakers and investors continue to analyze China's economy primarily through a property- and infrastructure-centered lens, they risk understating its underlying growth momentum. As the new economy expands in scale and technological sophistication, its impact is becoming large enough to reshape national growth dynamics rather than merely complement them, Yu said.

Lyu Jinkai contributed to this story.