China’s current approach is still far from this. Even consumption-boosting measures, like trade-in subsidy programmes, are aimed at soaking up supply and upgrading production capacity rather than stimulating household demand. They produce temporary spending bumps but no structural shift.
The most potent tool for boosting consumption – allowing market-determined returns on household savings – remains off the table. Raising deposit rates would immediately boost household income and reduce precautionary savings. But it would also drain resources from state-directed technological investment.
THE NEXT FIVE YEARS
The next five years will reveal whether Beijing can maintain commitments to both tech supremacy and consumption growth – or whether one goal inevitably undermines the other.
The most likely outcome is more of the same: unwavering commitment to technological self-reliance, framed as an existential issue. Even as it constrains household income growth, the consumption measures will be incremental and fall short of structural transformation.
For global markets, this contradiction has profound implications. A China that succeeds at rebalancing creates different trade dynamics and investment patterns than the export-dependent industrial powerhouse of recent decades. A China that fails risks policy oscillation, creating sustained uncertainty about the world’s second-largest economy.
The question isn’t whether Beijing wants consumption-led growth – the 15th Five-Year Plan makes that clear. The question is whether it can deliver while simultaneously pursuing technological supremacy. That tension will shape global economic stability through 2030.
Diana Choyleva is the founder and chief economist of Enodo Economics and a senior fellow at the Asia Society Policy Institute’s Center for China Analysis.
https://www.channelnewsasia.com/commentary/china-economy-deflation-measures-consumption-tech-self-reliance-5571011
