As China’s economy faces headwinds from slowing growth, the country’s top leadership is placing a big bet on getting Chinese consumers to spend more money at home. The Politburo has identified domestic demand as the main engine to power economic growth in 2026, marking a clear shift from relying heavily on exports to focusing on what happens inside China’s borders.
Think of it like a restaurant that decides to focus more on regular neighborhood customers instead of depending mostly on tourists. China’s leaders want to build a strong internal market that can keep the economy humming even when outside conditions get bumpy.
This strategy responds to some real challenges the country faced in late 2025, including weaker investment activity and sluggish consumer spending.
To make this happen, China plans to open its wallet wider through fiscal policy. The government will maintain a deficit ratio of at least 4% and increase special bond issuances beyond previous levels. Total government borrowing is expected to exceed 12 trillion yuan, which equals about $1.7 trillion. That’s a substantial amount of money aimed at jumpstarting economic activity.
On the monetary side, China will continue a moderately loose policy to make borrowing cheaper and keep markets stable. This approach is like turning down the interest rate dial to encourage people and businesses to spend and invest more freely. The bond purchases and other monetary tools will help support liquidity during these challenging economic conditions.
The central bank will also strengthen regulations to manage economic ups and downs more effectively. The approach emphasizes cross-cyclical regulation to better coordinate policy responses across different economic cycles.
The Politburo isn’t just throwing money at the problem though. Leaders are pushing structural reforms and developing what they call “new productive forces” to create innovative economic capabilities. They’re particularly interested in boosting the service sector and improving social welfare programs to encourage more consumer spending. These economic priorities were set during the December 8 meeting as part of preparations for annual economic planning sessions.
Interestingly, China’s export machine keeps humming along quite well, maintaining 5% growth in 2025 and pushing the trade surplus toward the $1 trillion milestone.
However, policymakers recognize that export strength alone won’t be enough to hit their growth targets for 2026. The real test will be whether Chinese consumers embrace their role as the economy’s new driving force.
