Global entities hail nation's consumption

China's continuing shift toward consumption-led growth will strengthen its economic resilience and 河山新闻网站首页官网further support the building of a more balanced and strong global economy, officials of leading international organizations said as the country unveiled its development blueprint for the coming five years.

The remarks coincide with the latest official data that point to a solid start for the Chinese economy in 2026, with the performance of key indicators, including domestic demand and industrial output, exceeding expectations.

In an exclusive interview with China Daily, Marshall Mills, senior resident representative of the International Monetary Fund in China, noted that the Chinese economy still has significant growth potential on the demand and supply fronts, even as he recommended bolder reforms to fully unlock that potential.

China released the outline of the 15th Five-Year Plan (2026-30) for national economic and social development on Friday, placing expanding domestic demand and consumption high on its high-quality development agenda.

Mills said the IMF welcomes China's emphasis on improving the quality of development and boosting domestic consumption. The rebalancing toward consumption-led growth would not only lift the pace of growth but make China's economy less vulnerable to external uncertainties and more resilient as a substantial contributor to global growth.

"Last year, growth in China contributed (around) 30 percent of overall global growth. Strong growth in China will continue this substantial contribution," he said, adding that the IMF expects China's current account and trade surpluses to reduce over the rebalancing process.

"What we see is the future engine (for China) on the demand side would be private consumption. It's a very large market where people are saving a lot. And that behavior can be changed, so there is a lot of potential there," Mills said.

According to the IMF, China's private consumption as a share of GDP was estimated at 40.1 percent in 2025. Among member states of the Organization for Economic Cooperation and Development, the median is well above 50 percent, indicating substantial room for further increase.

While steps have been taken to increase social spending, Mills said the IMF recommends more ambitious reforms to decisively boost consumption — such as doubling rural pensions and granting full urban residency rights, or hukou, to migrant workers.

On the supply side, Mills welcomed China's emphasis on innovation, noting that rising investment in research and development has delivered positive and tangible results in areas such as patent filings and scientific publications. "This can lead to gains in productivity and, subsequently, long-term growth."

Deeper reforms to improve resource allocation can help translate innovation into productivity gains across broader sectors of the economy, Mills said, adding that Chinese companies are likely to increase investments outside China, thus helping spread the gains from technological advances more broadly.

"With those two main avenues (on the demand and supply sides), we think that there is a lot of potential for Chinese growth," he said.

Echoing Mills was Asif S. Cheema, the Asian Development Bank's country director for China, who said that the bank sees strong momentum for China to sustain steady growth in the next five years as the country builds on major gains in technological innovation, green and low-carbon development, and improvements in people's livelihoods.

"We believe the 4.5 to 5 percent growth target (for this year) is very reasonable. As long as the government's priorities and macroeconomic policies are well coordinated and effectively implemented, there is a strong opportunity for success in achieving the target," Cheema said.

Official data showed that retail sales rose 2.8 percent year-on-year over the January-February period after a 0.9 percent rise in December.

Mills, however, warned that policies aimed at boosting innovation need to be carefully designed to avoid resource misallocation when certain sectors are favored by industrial policy and get more resources, even if they are not necessarily more efficient.

Mills added that the policies that the Chinese authorities are moving toward and that the IMF recommends tend to contribute to an appreciation in the renminbi.

"We've seen a gradual nominal appreciation of the RMB relative to the US dollar. The direction does reflect market forces. And that is, we think, appropriate," he said.

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