Can Xi Jinping Make China Spend? |
“Task One of China’s 2026 economic work,” Beijing’s leadership declared at last month’s Central Economic Work Conference (CEWC), is to “adhere to domestic demand as the main driver and build a strong domestic market.” But clear statements don’t necessarily mean clear actions. As much as Beijing says it might want to grow consumption at home, for both domestic stability and international sustainability, Chinese leaders may not be willing to act on the scale necessary to make it reality.
Even before the 2008 financial crisis, which jolted Beijing into recognizing the volatility of global markets, Chinese officials emphasized the importance of consumption. As early as 2004, Beijing articulated a people-centered approach to development, and in 2007 the 17th Party Congress explicitly called for rebalancing growth and expanding domestic demand.
“Task One of China’s 2026 economic work,” Beijing’s leadership declared at last month’s Central Economic Work Conference (CEWC), is to “adhere to domestic demand as the main driver and build a strong domestic market.” But clear statements don’t necessarily mean clear actions. As much as Beijing says it might want to grow consumption at home, for both domestic stability and international sustainability, Chinese leaders may not be willing to act on the scale necessary to make it reality.
Even before the 2008 financial crisis, which jolted Beijing into recognizing the volatility of global markets, Chinese officials emphasized the importance of consumption. As early as 2004, Beijing articulated a people-centered approach to development, and in 2007 the 17th Party Congress explicitly called for rebalancing growth and expanding domestic demand.
Yet, despite these early signals, policy priorities in practice continued to favor industrial capacity, infrastructure, and export competitiveness. Given that, skepticism about political resolve today is understandable. Chinese President Xi Jinping now appears intent on removing any ambiguity. In a recent article in Quishi, the Chinese Communist Party’s key intellectual journal, titled “Expanding Domestic Demand Is a Strategic Choice,” Xi elevates weak domestic demand to a core issue of economic stability and security, arguing that boosting domestic demand is “not a temporary expedient but a strategic choice.”
The piece is unusually direct in identifying insufficient domestic demand, especially weak consumption, as the most pressing challenge facing the economy and calls for accelerating efforts to close the consumption gap.
But some critics’ doubts aren’t just about Xi’s intentions. They are rooted in the structure of China’s growth model itself. China’s economic system has long been organized around a production-first logic, in which investment sits at the starting point of the growth chain and consumption at its end point.
Investment has been treated as the primary instrument, while consumption has been framed as the eventual outcome rather than the foundation of growth. To be fair, domestic demand has steadily increased over time, and household consumption has risen in absolute terms. But the expansion of the supply side has been way faster. The result has been a persistent