Business

China Seeks to Upgrade Services Consumption As Key to Boosting Growth
By Reuters | 26 Jan, 2026

Struggling with an economy over-invested in manufacturing, China seeks to raise services consumption to levels more appropriate to its developmental stage.

China will work to boost domestic consumption in services while stepping up efforts to push consumers to buy more goods, an official said on Monday, in the latest move to address industrial overcapacity and reduce the economy's reliance on overseas demand.

 China will "nurture fresh growth areas in service consumption and grasp the trend of consumption upgrading," Vice Commerce Minister Yan Dong said at a Monday press conference, citing potential growth areas including transportation, tourism, automotive, domestic services such as cleaning, and online services including livestreaming.

China will also optimise existing consumer goods trade-in programmes to encourage people to buy goods such as cars and home appliances, Yang Mu, head of the commerce ministry's department of consumption promotion, told the briefing.

There will be an effort to support foreign-invested enterprises in the push, Wang Ya, a commerce ministry official added, including by supporting foreign-invested companies in participating in government procurements and tenders.

Chinese leaders have been pledging to boost domestic consumption and tackle deep-rooted overcapacity problems, amid concern the export boom that cushioned the economy from U.S. tariff shocks last year may prove difficult to sustain. 

But many people have been shaken by the uncertain economic outlook and would rather save than spend. Homeowners have seen their assets depreciate in a years-long property market slump, while weaker growth momentum since the pandemic has added to job insecurity. 

Retail sales grew 3.7% in 2025 compared with the previous year, lagging behind a 5% expansion in GDP and a 5.9% rise in industrial output. The gauge increased just 0.9% year-on-year in December, the slowest since December 2022. 

China's new bank loans last year totalled 16.27 trillion yuan ($2.34 trillion), the lowest since 2018, indicating weak credit demand from both businesses and households. 

The government has already extended its subsidy programmes for purchasing consumer goods and industrial equipment, having allocated 62.5  billion yuan and 93.6 billion yuan, respectively, to support the plan in its first phase.  

Reuters previously reported that the government was preparing measures to boost services consumption, including areas such as elderly care, healthcare and leisure, to lift overall demand, but analysts said its success would depend on rising household incomes and social welfare.

($1 = 6.9557 Chinese yuan renminbi)

(Reporting by Yukun Zhang, Josh Arslan and Colleen Howe; Editing by Tom Hogue and Kate Mayberry)