By Jin Yan, Vision Times
On July 2, China’s State Council released its 15th Five-Year Plan for Expanding Consumption, setting an ambitious goal of increasing the country’s total retail sales of consumer goods to 60 trillion yuan (approximately USD $8.4 trillion) by 2030.
The plan aims to stimulate domestic demand as policymakers seek to offset slowing economic growth, corporate exodus, and a weakening property market. Yet several Chinese economists argue that the country’s sluggish consumer spending reflects deeper structural problems that cannot be solved through stimulus measures alone.
Their assessments are echoed, in part, by the personal experience of former private entrepreneur Song Yanjun, who says deteriorating consumer confidence and mounting business pressures ultimately led him to leave China and start a new life in Canada.
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Weak consumption reflects structural challenges
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Economist Wang Xiaolu, deputy director of the National Economic Research Institute, argues that China’s household consumption has remained unusually low for years. According to Wang, household consumption accounts for roughly 37 to 38 percent of China’s GDP, well below the levels seen in many developed economies, where household consumption often exceeds 60 percent.
He attributes much of the gap to income distribution and China’s social welfare system. Wang has argued that nearly half of China’s approximately 460 million urban workers lack local household registration, or hukou, limiting their access to public services and social benefits. Without stronger unemployment protection or broader social safety nets, many households choose to save rather than spend out of concern for future financial uncertainty.
He has also criticized some local governments for prioritizing visible infrastructure projects over investments in healthcare, education, and social welfare, arguing that stronger public services would reduce precautionary savings and encourage consumer spending.
Income expectations matter
Economist Fu Peng reached a similar conclusion through a different lens. He argues that consumer spending is ultimately driven by household income, wealth, and expectations about the future; not simply by government efforts to encourage spending. According to Fu, China’s slowing property market has significantly weakened what economists refer to as the “wealth effect.”
For years, rising home values boosted household confidence and encouraged discretionary spending. As property prices have softened, many middle-class families have seen their assets decline in value, leading them to cut back on consumption.
Fu also points to broader demographic trends, including China’s aging population and shrinking workforce, which he believes will continue to weigh on long-term consumer demand. At the same time, corporate cost-cutting and slower wage growth have further dampened household income expectations, making consumers more cautious about discretionary purchases.
A business owner’s perspective
Former entrepreneur Song Yanjun, who now lives in Canada, says he witnessed many of those economic trends firsthand while operating businesses in eastern China. In an interview with Vision Times, Song said one of his education brands previously operated more than 400 locations across the region, including more than a dozen in Shanghai. Today, he says, only two Shanghai locations remain.
According to Song, demand began weakening noticeably over the past several years as parents became increasingly reluctant to spend on higher-priced educational services. He also described seeing similar changes in everyday consumer behavior, recalling that business dinners that once cost tens of thousands of yuan are now often held for only a fraction of that amount.
Beyond declining consumer demand, Song alleged that he faced growing regulatory and legal pressure while operating his businesses. He claimed local authorities formed a multi-agency task force to investigate his company and threatened him with various criminal charges if he did not relinquish control of certain business assets. Song added the experience ultimately led him to leave China.
Different perspectives, similar conclusions
Though Wang, Fu, and Song approach the issue from different perspectives, their observations converge on a similar point. Wang emphasizes structural issues such as income distribution and limited social protections. Fu highlights declining household wealth, demographic change, and weaker income expectations. Song’s experience, meanwhile, offers an anecdotal example of slowing consumer demand and growing uncertainty within the private sector.
Their perspectives differ in important ways. Wang’s and Fu’s assessments are based on publicly available economic data and macroeconomic analysis, while Song’s account reflects his own experiences and opinions. Still, together they underscore a broader debate surrounding China’s economic outlook.
As Beijing pursues its goal of expanding retail sales to 60 trillion yuan by 2030, many economists argue that sustainable consumption growth will depend less on creating new opportunities to spend and more on strengthening household income, improving social protections, and restoring consumer confidence.
Whether those structural challenges can be addressed may ultimately determine whether China’s consumption targets prove achievable in the years ahead.
