At ‘Summer Davos’, Li Qiang vows China will be ‘mega-sized’ consumption power

Premier Li Qiang has pledged that China will become a “consumption powerhouse” capable of fuelling domestic and global growth, even as he acknowledged the country was grappling with a slump in cross-border investment and persistent trade tensions. Speaking at the World Economic Forum’s annual meeting in Tianjin on Wednesday, Li reiterated Beijing’s commitment to boosting demand in the world’s second-largest economy and defending globalisation. “This will make China a mega-sized consumption powerhouse, on top of being a manufacturing powerhouse,” Li said at the gathering, also known as Summer Davos. “We are on track to become a high-income country supported by robust consumption upgrades,” he added. Beijing’s pivot towards stimulating household spending has gained urgency amid a volatile trade war with the United States and rising global uncertainty. Consumer activity picked up in May, helping offset pressure on manufacturing and exports in a challenging tariff environment. Retail sales rose by 6.4 per cent year on year, compared to 5.1 per cent in April. Li struck an optimistic tone in his keynote address. “The continuous expansion and upgrade of the Chinese market will create room for the global economy and trade to regain momentum,” he said. “China is the world’s second-largest consumer market and importer, with nearly 50 trillion yuan (US$7 trillion) of consumption and over 20 trillion yuan of imports.” However, the Chinese premier warned that an increasingly unstable global environment posed risks. “More restrictive policies on foreign investment, compounded by trade tensions, have made multinationals more prudent … Global cross-border investment has seen negative growth for three consecutive years,” Li said. To spur domestic sales of consumer durables, China has rolled out a comprehensive trade-in programme, generating about 1.1 trillion yuan in sales in the first five months of 2025. On Tuesday, the People’s Bank of China announced 19 measures aimed at further boosting consumption in goods and services through structured financial support. During a visit to Hebei province on Monday and Tuesday, Chinese Vice-Premier He Lifeng also urged local governments to “integrate the trade-in programme with urban renewal” as part of wider efforts to stabilise the struggling real estate market and provide people with “good homes”, state-run Xinhua News Agency reported. He called on local authorities to investigate problems faced by enterprises, roll out measures to mitigate external shocks and renew efforts to achieve this year’s economic targets. Beijing has also stepped up efforts to attract and retain foreign investment after FDI inflows declined in the first five months of 2025 – with receipts falling 13 per cent to 358.1 billion yuan. During an afternoon meeting with more than 160 business representatives from over 30 countries and regions on Wednesday, Li urged foreign companies to provide more high-quality products and services to the Chinese market; strengthen cooperation with Chinese enterprises in science and technology industries; and better achieve supply-and-demand matching, mutual benefits and win-win situations. Exports also struggled in May, recording their weakest growth in three months, with shipments to the US plummeting more than a third. Still, Premier Li was emphatic that China would remain a major driver of global growth in a tumultuous world. “We have the confidence and capability to keep China’s growth at a relatively fast pace,” he said. “For years, China has remained a pillar accounting for around 30 per cent of global growth.” Beijing has set an annual GDP target of about 5 per cent this year. The premier’s bullish outlook came amid China’s recent advances in technology and innovation, including in artificial intelligence. He said Chinese tech was “leading the world” and that it was “open” to everyone. Without directly naming the US, Li cautioned against unilateralism and acts that he compared to the “law of the jungle”. “No one can alter the overriding trend of history or the laws of the objective world. Globalisation will not be reversed,” Li said. “[It] will only carve out a new path and forge ahead. We shall align with overall trends, demonstrate wisdom and a sense of responsibility and take constructive actions.” To tackle global challenges, Li urged countries to grow the economic “cake” through cooperation and sharing, rather than resorting to zero-sum games, brute force or self-interest. Xu Weijun, a public policy researcher at South China University of Technology, said Li’s pro-consumption and pro-globalisation stance could help reassure countries caught between China and the US. “Countries in Southeast Asia or elsewhere in the developing world fear a double-whammy of US tariffs and Chinese goods flooding their markets amid the trade war and China’s overcapacity woes,” Xu said. “Li’s mission statement on consumption, though not entirely new, may allay such concerns … Beijing’s message is that Chinese people will spend more and that’s good news for the world. Consumption growth is also borne out by the latest data.” Morgan Stanley chief China economist Robin Xing said in a research note on Monday that, with the de-escalation in US-China tariff tensions, China’s GDP growth was likely to sustain at 4.5 per cent this year. China’s export growth could remain robust in the second quarter before slowing in the second half of this year, but deflation is here to stay, according to the research note, titled “Lingering Deflation Despite Tariff Detente”. HSBC economists led by Jing Liu said in a research note last week that, while China’s goods consumption was in line with global levels, services consumption was lagging. “More policies emphasising services demand and structural reforms to support people’s welfare … will help sustain consumption,” the note said, specifically mentioning a relaxation of the hukou household registration system that classifies residents as urban or rural, impacting access to education, healthcare and other opportunities.

At ‘Summer Davos’, Li Qiang vows China will be ‘mega-sized’ consumption power

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}In a turbulent world, Beijing will double down on household spending to fuel growth and overcome risks, China’s premier says

In a turbulent world, Beijing will double down on household spending to fuel growth and overcome risks, China’s premier says