Question: Some international commentators argue that China’s economy has long relied on investment and exports, and that insufficient domestic demand has become a key constraint on its internal economic circulation. If external demand weakens, can China’s domestic consumption really play a role in stabilising growth? How would you respond to that?

Embassy Spokesperson: The simplistic characterisation of the Chinese economy as “investment and export-driven growth with insufficient domestic demand” is an outdated narrative. In fact, China’s growth model is steadily shifting from one led by investment to one largely driven by consumption and services. Consumption is becoming an important pillar and anchor of stability for the Chinese economy.

Figures clearly illustrate this shift. In 2025, final consumption expenditure contributed 52% of economic growth, and total retail sales of consumer goods exceeded 50 trillion yuan, consolidating China’s position among the world’s largest consumer markets. If consumption were truly insufficient, it would not have contributed more than half of economic growth nor sustained a market of such scale.

More importantly, China’s consumption is undergoing a shift from expansion in scale to structural upgrading. As household incomes rise, consumer demand is moving beyond traditional goods towards services, higher-quality and more experience-oriented spending. Sectors such as culture and tourism, healthcare and elderly care, and sports and entertainment are growing rapidly. In 2025, service consumption accounted for over 46% of per capita household consumption. At the same time, the digital economy continues to expand the boundaries of consumption. Online retail sales approached 16 trillion yuan, and new business models such as livestreaming e-commerce and instant retail are growing quickly. The accelerated integration of online and offline consumption is fostering a more resilient and dynamic domestic demand system.

The strength of China’s domestic demand also comes from its 1.4-billion population and the world’s largest middle-income group. Overall stability in employment and income provides sustained momentum for consumption growth. 

China is moving from building factories to building markets, and from expanding capacity to boosting demand. Despite uncertainties in global demand, China’s domestic demand is not only capable of cushioning external shocks. It is also becoming the most stable, enduring and resilient driver of China’s growth.