Expanding domestic demand a crucial task

Editor's note: Zhang Junkuo, a member of the 14th National Committee of the Chinese People's Political Consultative Conference and chairman of the China Development Research Foundation, spoke to China Economic Times ahead of the annual two sessions about the prospects for China's exports, consumption and investment in 2026. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

Global economic growth in 2026 is likely to be slightly lower than in the previous year, while growth in global trade — especially trade in goods — will probably be significantly lower. This is based on projections from major international organizations, including the International Monetary Fund, World Bank, the Organization for Economic Cooperation and Development, United Nations and World Trade Organization.

China's exports have remained highly resilient in recent years mainly because of the rapid growth in new products, its diversified markets and the growing strength of the country's supply chain. These favorable conditions will continue to play a role this year as well.

However, China will still face a considerably volatile external environment. The market expects exports to grow by 3 to 5 percent, which is lower than last year.

While the country will continue to implement policies to boost consumption and stabilize employment and more consumption scenarios and sectors will emerge, helping unlock spending, the steady growth of household consumption depends on stronger purchasing power and firmer consumer confidence. These in turn rely on marked improvements in employment and income, as well as healthier household asset conditions and rising personal wealth.

All these improvements cannot be achieved overnight, because they are subject to the overall macroeconomic improvement. It is widely expected that the growth rate of the country's consumer demand will be moderately higher than that of last year, with most market institutions forecasting a 4 to 5 percent growth.

As for investment, many major projects, including those in science and technology, infrastructure, green transition and those concerning people's well-being, will be launched this year. These projects will lend important support to the recovery of investment.

The country will also continue to focus on promoting effective investment by implementing favorable policies. The arrangements made at the Central Economic Work Conference in December will reverse the decline in investment.

The Ministry of Finance has stated that the overall fiscal spending "will only increase" this year, and that the country will continue to issue ultra-long special treasury bonds. China should see a revival of investment, which is expected to grow by 2 to 3 percent this year.

Expanding domestic demand plays a critical role in boosting confidence, stabilizing growth, and promoting the high-quality development of China's economy in the long term. The country should maintain the intensity of its macroeconomic policies to expand domestic demand, and address the deep-seated growth challenges it faces.

It has become increasingly clear that low consumer demand in China is not only due to short-term market volatility but also caused by long-term structural factors. To counter these factors, policies should include not only strong and short-term stimulus, but also measures to address the deep-seated factors and consolidate the basis for sustainable growth.

To stimulate investment demand, efforts should be accelerated to establish a new real estate development model that suits the current stage of China's development. At the same time, measures are needed to vigorously boost private and foreign investment.

Further improvements in the business environment through deeper reform and greater opening-up are also crucial to stabilize and strengthen expectations and confidence among entrepreneurs.