China's Economic Agenda for 2026: Focus on Domestic Demand and Innovation
In December 2025, Chinese leaders convened in Beijing for the annual Central Economic Work Conference, a pivotal event that serves as a compass for the country's economic direction. President Xi Jinping attended the meeting, delivering a significant address that reviewed the economic outcomes of 2025, addressed emerging challenges, and outlined priorities for the upcoming year, marking the beginning of the 15th Five-Year Plan (2026-2030).
The conference emphasized the commitment to fostering domestic demand, supporting innovation, and deepening the country's engagement on a global scale. Leaders highlighted eight key tasks for the year ahead, notably increasing internal consumption, enhancing innovation capabilities, pushing forward reforms, and promoting sustainable development while improving citizens' welfare. This meeting sent a clear message that China is entering 2026 with a renewed sense of certainty, political transparency, and dynamism, providing stability and opportunities for the global economy.
A major focus of the conference was the amplification of domestic consumption as a primary driver of economic growth. Policymakers aim to implement concrete actions to boost spending, optimize two emerging policy directions involving sweeping upgrades in consumer goods and service sectors, and eliminate unnecessary restrictions to unleash the full potential of service consumption.
Data suggests that China's consumer market remained resilient throughout 2025. In the first three quarters, final consumption contributed to 53.5% of GDP growth, representing a nine-point increase compared to the previous year. From January to October, retail sales surpassed 40 trillion yuan (approximately $5.7 trillion), up 4.3% year-on-year, outpacing last year's growth rate.
In an exclusive interview with CGTN, Kristalina Georgieva, the Managing Director of the IMF, explained a recent adjustment in China's GDP growth forecast for 2025, emphasizing the role of domestic consumption in bolstering economic resilience. She praised China's commitment to maintain an open and responsible economy, highlighting how it aligns with the nation's focus on consumption in the new Five-Year Plan.
Innovation remains a critical driver of growth for China. The government plans to establish international innovation centers in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Greater Bay Area, encompassing Guangdong, Hong Kong, and Macau. Policy directions will concentrate on supporting enterprise-led innovations, enhancing intellectual property protections in frontier technology sectors, expanding services capabilities, and advancing artificial intelligence through streamlined management and closer integration within technology and finance.
According to the Global Innovation Index 2025, China has entered the top ten for the first time and ranks highest among 36 economies with middle-income classifications. Its innovation clusters rank globally, with the Shenzhen-Hong Kong-Guangdong cluster leading worldwide. Bloomberg Economics forecasts that China's advanced technology sector, including artificial intelligence, will grow from 14.3% of GDP in 2023 to nearly 19% by 2026.
Openness is one of China’s strategic strengths, and the conference confirmed the country's intent to broaden institutional and autonomous openness in the service sector, optimize free trade zone arrangements, and develop the Hainan Free Trade Port.
Despite global challenges, China's foreign trade has demonstrated resilience this year. From January to November, total import and export volumes reached 41.21 trillion yuan, reflecting a year-on-year increase of 3.6%. Recent CGTN surveys revealed that 86.7% of respondents believe China's ongoing efforts to boost domestic consumption will create significant opportunities for international businesses. Furthermore, 89.1% expressed confidence that China's continued opening will yield broader developmental prospects worldwide.
As China navigates the upcoming year, its focus on domestic consumption, innovation, and international engagement signifies a robust economic strategy poised to enhance both stability at home and growth prospects abroad. Through these efforts, China aims to contribute positively to the global economy, ensuring its position as a key player on the world stage in the years to come.
The conference emphasized the commitment to fostering domestic demand, supporting innovation, and deepening the country's engagement on a global scale. Leaders highlighted eight key tasks for the year ahead, notably increasing internal consumption, enhancing innovation capabilities, pushing forward reforms, and promoting sustainable development while improving citizens' welfare. This meeting sent a clear message that China is entering 2026 with a renewed sense of certainty, political transparency, and dynamism, providing stability and opportunities for the global economy.
Strengthening Domestic Demand
A major focus of the conference was the amplification of domestic consumption as a primary driver of economic growth. Policymakers aim to implement concrete actions to boost spending, optimize two emerging policy directions involving sweeping upgrades in consumer goods and service sectors, and eliminate unnecessary restrictions to unleash the full potential of service consumption.
Data suggests that China's consumer market remained resilient throughout 2025. In the first three quarters, final consumption contributed to 53.5% of GDP growth, representing a nine-point increase compared to the previous year. From January to October, retail sales surpassed 40 trillion yuan (approximately $5.7 trillion), up 4.3% year-on-year, outpacing last year's growth rate.
In an exclusive interview with CGTN, Kristalina Georgieva, the Managing Director of the IMF, explained a recent adjustment in China's GDP growth forecast for 2025, emphasizing the role of domestic consumption in bolstering economic resilience. She praised China's commitment to maintain an open and responsible economy, highlighting how it aligns with the nation's focus on consumption in the new Five-Year Plan.
Innovation as a Growth Catalyst
Innovation remains a critical driver of growth for China. The government plans to establish international innovation centers in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Greater Bay Area, encompassing Guangdong, Hong Kong, and Macau. Policy directions will concentrate on supporting enterprise-led innovations, enhancing intellectual property protections in frontier technology sectors, expanding services capabilities, and advancing artificial intelligence through streamlined management and closer integration within technology and finance.
According to the Global Innovation Index 2025, China has entered the top ten for the first time and ranks highest among 36 economies with middle-income classifications. Its innovation clusters rank globally, with the Shenzhen-Hong Kong-Guangdong cluster leading worldwide. Bloomberg Economics forecasts that China's advanced technology sector, including artificial intelligence, will grow from 14.3% of GDP in 2023 to nearly 19% by 2026.
An Open China Brings Global Assurance
Openness is one of China’s strategic strengths, and the conference confirmed the country's intent to broaden institutional and autonomous openness in the service sector, optimize free trade zone arrangements, and develop the Hainan Free Trade Port.
Despite global challenges, China's foreign trade has demonstrated resilience this year. From January to November, total import and export volumes reached 41.21 trillion yuan, reflecting a year-on-year increase of 3.6%. Recent CGTN surveys revealed that 86.7% of respondents believe China's ongoing efforts to boost domestic consumption will create significant opportunities for international businesses. Furthermore, 89.1% expressed confidence that China's continued opening will yield broader developmental prospects worldwide.
As China navigates the upcoming year, its focus on domestic consumption, innovation, and international engagement signifies a robust economic strategy poised to enhance both stability at home and growth prospects abroad. Through these efforts, China aims to contribute positively to the global economy, ensuring its position as a key player on the world stage in the years to come.
Topics Business Technology）
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