Nation drafting plan to boost demand

China is drafting a five-year plan to expand domestic demand, redoubling efforts to boost consumption and investment as the world's second-largest economy seeks to ensure sustainable growth amid persistent external uncertainties, officials and experts said.

The National Development and Reform Commission, the country's top economic regulator, is coordinating efforts across multiple government departments to formulate an implementation plan to expand domestic demand for the 2026-30 period, said Zhou Hongwei, deputy director of the commission's department of national economy.

The push comes as first-half data revealed a widening K-shaped recovery, with high-tech and exports pulling ahead while consumption and investment remained weak.

Zhang Bin, a senior researcher at the China Finance 40 Forum, said that the current economic growth has been largely driven by external demand, while internal drivers such as consumption and investment are softening.

Moreover, the contraction in fiscal spending has become a fresh drag on the economy, said Zhang, who is also deputy director of the Chinese Academy of Social Sciences' Institute of World Economics and Politics.

China's broad fiscal outlays, combining general public budget spending and government-managed fund expenditures, reached just 43.5 percent of the annual budget in the first half of the year, slightly below the same period last year, according to estimates from CF40.

Shrinking government outlays are rippling through the real economy, cutting into corporate and household incomes and adding fresh pressure to already fragile domestic demand, while the property sector continues to act as a key drag, Zhang said.

A meeting held by the Political Bureau of the Communist Party of China Central Committee on Thursday called for efforts to "accelerate the pace of fiscal spending".

To this end, Zhou from the NDRC said it will use the peak construction season in the third quarter to speed up the deployment of 800 billion yuan ($118.56 billion) in new policy-based financial instruments, and accelerate the issuance and utilization of special-purpose bonds.

"We will also increase the share of government investment in livelihood-related projects to help boost demand," Zhou said.

Meanwhile, Zhou noted that the government will expedite the "six networks" infrastructure, covering water, power, computing, next-generation communications, urban pipelines and logistics.

Infrastructure investment growth is expected to return to positive territory in the second half of this year, reaching about 3 percent for the full year, according to projections from Orient Golden Credit Rating International. This will offer a critical footing to arrest the broader downturn in fixed-asset investment.

On the consumption front, the NDRC has pledged to double down on the pro-employment strategy, expand large-scale vocational training and pursue multiple channels to boost household earnings.

Meanwhile, efforts will be made to tailor supply to diverse demographic needs, while upgrading everyday living services. In particular, a major push to flood the market with artificial intelligence-enhanced phones and PCs, smart wearables and advanced robotics is expected.