China's just-concluded annual Central Economic Work Conference sends out an encouraging message for further lifting domestic consumption in the coming year, said a Chinese economist on Friday.
Wang Yiming, vice chairman of the China Center for International Economic Exchanges, shed more light on first and foremost of the eight priorities for economic work in 2026 outlined by this year's tone-setting economic meeting held in Beijing on Wednesday and Thursday, while speaking at a special program of the China Central Television (CCTV).
The Central Economic Work Conference has highlighted expanding domestic demand as the first priority in 2026, promising in-depth implementation of special actions to boost consumption and plans to increase the income of urban and rural residents in order to unleash the potential for services consumption.
According to Wang, this is a clear signal that the central government will take more concrete steps to shift the world's second largest economy from an export-oriented one to one driven more by household consumption, with more action plans anticipated to increase people's incomes and spur household spending.
Key to the authorities' pledge is an increase in the residents' disposal incomes, Wang said, adding that it should be accomplished both directly by enabling people to take home better pays from work and indirectly by increasing fiscal spending on public services and welfare programs related to people's livelihoods.
"Boosting consumption requires a package of plans, on which we have been working for years, but the most fundamental factor remains income. As we often say, consumption is a function of income (meaning that the consumption function relates the amount of consumption to the level of income), which is why it is necessary to increase people' incomes. The Central Economic Work Conference has proposed to make plans to increase the people's incomes, which, I think, is very encouraging," he said.
"The increase of people's incomes covers two parts. One is their direct incomes, meaning the need to raise people's remuneration of work, or their wages and salaries. With the economy developing, payment to workers should go up gradually in tandem. The other is their indirect incomes, meaning the need to increase government expenditure on public services and livelihood programs, such as elderly care, health care and education. Once the coverage of government expenditure expands in these areas, the people's corresponding spending on these things will become less, thus indirectly increasing their incomes and enhancing their purchasing power. About the second aspect, in particular, the Central Economic Work Conference has emphasized the need to closely combine investment in human capital with investment in physical assets, with the former indicating more spending on public services, increased supply of public services, and greater expenditure on livelihood programs," he said.
Economist on expanding domestic consumption as priority for 2026
