Consumer demand and public services top China’s financial priorities for 2026

China will expand government spending to spur consumer demand and shore up investment in public services to strengthen the economy next year, the country’s financial authorities said on Sunday. The Ministry of Finance outlined the 2026 priorities as it wrapped up the annual two-day national fiscal work conference on the weekend. At the top of the list of tasks, the ministry said, was building a robust domestic market through “vigorously boosting consumption” and “actively expanding effective investment”. “Our country’s domestic market holds huge potential,” state news agency Xinhua quoted Finance Minister Lan Foan as telling the conference. “Fiscal policy should play an active role in expanding domestic demand and smoothing circulation in the economy.” Lan also said China would continue in 2026 the “more proactive” fiscal policy that it adopted for the first time in 2025. The main focus of that approach next year would be to “expand the scale of fiscal spending and ensure the necessary intensity of expenditure”, including more funds to support China’s massive consumer trade-in programme. The comments echoed the direction of the agenda-setting central economic work conference earlier this month and suggested greater tolerance towards certain levels of deficits, debt and expenditure to stabilise growth. China is looking more to its 1.4 billion domestic consumers to drive growth in the world’s second-biggest economy as it tries to guard against external headwinds, particularly its fierce strategic rivalry with the United States, by cutting its reliance on exports. That direction was spelled out in Qiushi, the Communist Party’s leading theoretical journal, on December 15 in an article titled “Expanding Domestic Demand is a Strategic Move”. The article was a compilation of comments on the issue by President Xi Jinping over the past decade and led off with an excerpt from a speech Xi made in October 2015. “Final consumption is the lasting driver for economic growth,” he said, referring to the total spending on goods and services that directly satisfy individual or collective needs rather than are used to produce something else. However, there are signs that domestic consumer sentiment remains weak. According to National Bureau of Statistics data, retail sales growth in China slowed for the sixth consecutive month in November, rising just 1.3 per cent year on year after increasing 2.9 per cent in October. And fixed-asset investment – another indicator of domestic demand – fell 2.6 per cent year on year in the first 11 months of 2025, missing market estimates. It was a bigger fall than the 1.7 per cent decline recorded in the January-October period and raised the prospect of the first year-round contraction in two decades. Over the decades, the government has been central to China’s economic investment, channelling funds mainly to hardware or infrastructure such as bridges, railways and airports. However, observers have argued that more of those funds should go into education, public health, social welfare and measures to lift low-income households and unleash their consumption potential. Beijing went some way to acknowledging those arguments this year by adopting a framework for the next five-year plan that aims to “closely combine investment in physical assets with investment in people” to promote “well-rounded personal development”. The framework pointed to higher spending in areas such as education, health, aged care and childcare – an approach that invests in opportunities for people rather than relies solely on direct subsidies. The approach was also highlighted at the fiscal work conference on the weekend. “[We should] increase investment in key areas such as new quality productive forces and the well-rounded development of individuals,” the Ministry of Finance said in a statement. The ministry also said China would increase fiscal support for technological innovation and the green economy next year. The meeting also called for improvements to the country’s fiscal transfer payment scheme to expand the discretionary fiscal capacity of local governments – a call that suggests stronger measures in 2026 to better leverage government bonds.

Consumer demand and public services top China’s financial priorities for 2026

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}National fiscal work conference ends in Beijing with pledge to spur domestic market

National fiscal work conference ends in Beijing with pledge to spur domestic market