‘Investing in people’: Can China’s new push to boost spending revive the economy? in World Economy News 12/03/2026 China’s leaders are trying something new to revive the country’s slowing economy: encouraging people to spend more. At this year’s Two Sessions in Beijing – the country’s most important political meeting of the year – officials set an annual growth target of 4.5%–5%, the lowest since 1991. Alongside the goal, policymakers unveiled measures aimed at boosting household spending – a tacit admission that the old drivers of growth may no longer be sustainable. In many ways, it marks a reversal of China’s traditional approach. In the past, when growth slowed, Beijing built more apartments, motorways, factories and industrial parks – fuelling expansion through state investment, exports and a booming property market. Now policymakers are placing more emphasis on raising household incomes and strengthening consumption. “It’s a recognition by Beijing that the old growth model no longer works,” said Dexter Roberts of the Atlantic Council’s Global China Hub. The question now is whether China’s leaders can persuade households to open their wallets – and whether consumption can realistically become an engine of growth. Spend, spend, spend The measures announced include expanding services for the elderly, enforcing paid annual leave and more support for families raising children. Policymakers have also proposed an “urban-rural resident income growth plan” aimed at putting more money into the hands of people and narrowing income gaps. Officials describe this approach as “investing in people” – the idea that households are more likely to spend if they feel secure about growing their family and covering healthcare and retirement costs. China’s leadership is still doubling down on advanced manufacturing and technology in the upcoming 15th Five-Year Plan, aiming to embed artificial intelligence (AI) across the economy and strengthen industrial capabilities. But relying on exports alone may not provide a sustainable engine for growth as protectionism rises globally and demand for its goods weakens. “The task of transitioning to new growth drivers is formidable,” Premier Li Qiang said in the government work report, warning that “the imbalance between strong supply and weak demand is acute.” But can these social policies significantly change consumer behaviour? Why spending remains weak Chinese households already spend a smaller share of their income than people in most major economies. Household consumption accounts for about 40% of gross domestic product (GDP), compared with a global average of roughly 55% and about 60% in advanced economies. Recent data suggests government stimulus can encourage spending, but confidence remains fragile. During the Spring Festival holiday, authorities distributed billions of yuan in vouchers to encourage people to spend on transport and entertainment. Travel revenue for the period rose by about 19% compared with the previous year. But average spending per traveller declined and cinema box office takings fell sharply, suggesting households remain selective about parting with money. China’s leaders have historically been cautious about providing large-scale support to households, wary that stimulus could increase already high debt levels. “The narrative of a shift toward consumption-led growth is stronger than the policies currently supporting it, at least in the short to medium term,” said Gerard DiPippo of the