By He Yin, People’s Daily
Domestic demand has become a key word for the international community in observing China’s economy. In 2025, as China continued to make steady progress in implementing its strategy to expand domestic demand, its total retail sales of consumer goods surpassed 50 trillion yuan ($7.17 trillion) for the first time, showcasing to the world the opportunities and potential of China’s vast market.
Expanding domestic demand is both a necessary measure and an inevitable trend. A defining feature of major economies is that domestic demand plays the leading role and the economy can circulate internally. Building a complete domestic demand system and a strong domestic market helps better address real development challenges and cope with external uncertainties.
Domestic demand has gradually become the primary driving force and a stabilizing anchor for China’s economic growth. From 2013 to 2024, domestic demand contributed an average of 93.1 percent to China’s economic growth. In 2025, final consumption expenditure accounted for 52 percent of economic growth, surpassing half and marking an increase of 5 percentage points over the previous year.
More broadly, China’s consumption is moving toward innovation and structural optimization. In 2025, service consumption accounted for 46.1 percent of per capita consumer spending. E-commerce, livestream commerce, and online entertainment have driven rapid growth in online consumption, while the ice-and-snow economy, the first-mover economy, and the silver economy continue to gain momentum, becoming new growth drivers.
European news platform Modern Diplomacy noted that as China promotes a development model driven by domestic demand, led by consumption, and featuring endogenous growth, its economy is expected to achieve notable growth in 2026 in areas such as high technology, intelligent manufacturing, green energy, and service consumption.
The process of addressing challenges is also one of accumulating momentum for growth. In recent years, while some international voices have hyped the so-called “imbalance” narrative regarding China’s economy, they have overlooked the fact that issues such as robust supply coupled with relatively subdued demand are merely “growing pains” — challenges that can be resolved through determined and sustained efforts.
China’s mega market is multi-tiered and rich in potential. There is vast room for investment in new-type urbanization, science and technology industries, and improvements in people’s livelihoods.
At present, China’s household consumption rate is about 40 percent, leaving a potential increase of 10 to 20 percentage points compared with developed economies, while per capita infrastructure stock has room to grow by four to five times relative to advanced economies.
With more targeted and coordinated policy efforts, the potential of domestic demand will continue to be unleashed. In 2025, the consumer goods trade-in program benefited more than 360 million people, reflecting both market scale and policy effectiveness.
To tackle the rare occurrence of negative investment growth in recent years, China has promptly rolled out targeted measures, including refining the implementation of major national projects and key security-capacity initiatives, as well as effectively stimulating the vitality of private investment.
An international scholar following China’s development observed that China approaches difficulties with a rational and pragmatic attitude and addresses challenges through institutional strengths and policy tools — an important manifestation of the resilience of China’s economy. The Financial Times also published an article titled “Don’t Underestimate the Chinese Consumer.”
China’s unwavering commitment to expanding domestic demand will bring upgraded opportunities for global cooperation. Over the past five years, China has imported more than $15 trillion worth of goods and services in total. China is now the world’s second-largest consumer market, and in multiple segments, including automobiles, mobile phones, and home appliances, it has already become the largest market globally.
As China enters the 15th Five-Year Plan period (2026-2030), steadily rising household incomes and growing demand for a better life will spur new consumption and drive new supply. As China accelerates the transformation of its development model, optimizes its economic structure, and shifts growth drivers, new momentum for investment will continue to emerge, with broad space for both investment in physical assets and investment in people.
In this process, China is willing not only to be the “world’s factory,” but also the “world’s market,” accelerating its transition from a major manufacturing country to a major consumer country. This will inject strong and new momentum into mutually beneficial and win-win cooperation between China and the rest of the world.
To understand China’s economy, one needs to take a longer view. A China with surging domestic demand will have a stronger economic foundation and more abundant endogenous momentum, and will, through its own high-quality and sustainable development, inject greater certainty into global growth and open up more new opportunities.
