Jin Guanping: Understanding China's Systematic Approach to Expanding Domestic Demand

Ask AI · Under the system methodology, how do the various ministries form a concerted force for expanding domestic demand?

Recently, some overseas commentary claimed, “Although the Government Work Report reiterates expanding domestic demand, it provides few details on how to do it specifically.” This view is inaccurate. It shows that the commentators are unfamiliar with—or even misread—the evolution path of China’s macro policy framework and its specific substance. From the Government Work Report in recent years and the densely introduced supporting measures by various ministries released in the same period, it is clear that China’s strategy to expand domestic demand is not only sharply defined in its objectives, but also increasingly well-stocked in terms of policy tools, with an implementation path that is extremely specific.

Looking across the Government Work Report in recent years, expanding domestic demand has shown clear strategic deployment and tactical arrangements. In 2024, the Government Work Report proposed “focusing on expanding domestic demand,” and launched a policy arrangement to issue ultra-long-term special government bonds to support national major strategies. In 2025, expanding domestic demand was placed at the top of the government’s key tasks, and for the first time it explicitly stated “implementing a special action to boost consumption,” arranging special bond funds to support replacing old consumer goods with new ones, with the categories eligible for subsidies made specific. In 2026, the Government Work Report further described the task as “focusing on building a strong domestic market,” indicating that with external conditions characterized by increased uncertainty, making domestic demand the leading driver has become the top priority of China’s current economic work.

This year’s Government Work Report is full of actionable details in its plans to expand domestic demand. For example, to fundamentally enhance residents’ consumption capacity, the report clearly states that it should “formulate and implement plans for increasing the income of urban and rural residents.” On direct financial support, it not only allocates ultra-long-term special government bond funds for replacing old consumer goods with new ones, but also innovatively “sets up a special fund of CNY 100 billion in fiscal and financial coordination to promote domestic demand,” using a combination of tools such as loan interest subsidies and financing guarantees to precisely leverage market forces. These statements are by no means generic; rather, they provide clear levers for subsequent policy implementation.

To understand China’s various policies, it is also necessary to connect them with the economic governance operating mechanisms in order to grasp them more deeply. Taking the Government Work Report as an example, its essence is a concrete implementation plan for the decisions and deployments of the CPC Central Committee. Its formulation process follows the basic strategy of “adhering to the Party’s leadership over all work”: the Central Economic Work Conference sets the tone and the CPC Central Committee puts forward guiding requirements; the State Council drafts the report accordingly; after it is examined and approved by the National People’s Congress, it becomes a legally effective basis for governance. After the Two Sessions of the National People’s Congress and the National Committee of the CPPCC concluded, the State Council’s executive meeting examined and approved the “State Council 2026 Key Work Division Plan.” Relevant ministries and departments—including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, and the Ministry of Industry and Information Technology—acted quickly, issuing a series of specific policies that are mutually connected and applied with efforts in multiple dimensions, jointly building an integrated, three-dimensional policy system for expanding domestic demand. Targeting the root causes of insufficient domestic demand, this system advances simultaneously from multiple entry points, such as strengthening consumption capacity, optimizing the quality of supply, improving the consumption environment, and expanding investment space. In terms of enhancing consumption capacity, relevant departments are researching and formulating plans to stabilize jobs, expand capacity and improve quality, as well as plans to increase income for urban and rural residents, to strengthen residents’ confidence and willingness to consume.

Judging from the evolution of policies in recent years, China’s practice of expanding domestic demand has already formed a system methodology that looks both long-term and grounded in the present. Its core approach is being further deepened into “coordinating efforts to stimulate residents’ endogenous consumption momentum and boost consumption with consumption-promoting policies,” as well as “closely combining investment in things with investment in people.” This means that policy is no longer confined to short-term subsidy stimulus; it places even greater emphasis on institutional reforms and building long-term mechanisms. The approach that deeply integrates boosting consumption with improving people’s wellbeing, tightly links expanding investment with promoting transformation and upgrading, and closely ties filling weak links, reflects the forward-looking and systematic nature of policy design. All specific financial arrangements, lists of projects, and action plans are derived from this system approach, echoing each other and forming a concerted force.

The Chinese government’s efforts to expand domestic demand have clear goals, a defined path, and specific measures, demonstrating firm determination and pragmatic strategies to address the problem of insufficient domestic demand. In the face of complex and severe domestic and external economic conditions, this increasingly mature and precisely targeted policy framework is precisely the confidence that China has in strengthening the leading role of the domestic circulation and building a strong domestic market. (Source of this article: Economic Daily; Author: Jin Guanping)