MNI INTERVIEW: China Five-Year GDP Target Likely 4.7% Average

China’s upcoming 15th five-year plan, covering the nation’s key goals for 2026-2030, is expected to target an annual GDP increase of circa 4.7%, as productivity gains and greater domestic consumption counterbalances increasing external pressures, a member of the National 14th Five-Year Plan Economic Expert Committee told MNI.

Beijing will need to target an average 4.7% growth in the next five-year plan, which could be revealed before the end of the year, to maintain stable employment and ensure China meets its goal of doubling GDP by 2035 compared to 2020 levels, said Liu Qiao, dean of Guanghua School of Management at Peking University, noting yearly targets would range between 4.5% and 5%.

Boosting China’s total factor productivity (TFP) growth rate from 1.8% to over 2% by the end of the decade will help offset risks driven by U.S. tariffs and an increasingly fragmented global economy, he argued, which the next plan will likely address via a focus on new productive innovations, such as AI and other technologies.

"China's vast manufacturing base of around 30% of GDP positions it uniquely to realise TFP gains through AI and innovation, more than service-dominated nations," said Liu, who also participated in an economic advisory meeting with Premier Li Qiang last year.

REBALANCING

Liu called on Beijing to boost household consumption 20 percentage points over the next decade to 60% of GDP to rebalance growth drivers away from exports.

Household consumption accounts for 70% of GDP on average among high income economies, compared to a global median of about 56%, he noted, arguing China should aim to achieve its optimum economic structure by 2035, which would see household and government expenditure at about 75% of the economy, with investment and net exports accounting for around 20% and 5%, down from their present 40% and 20% levels. 

“It’s a tough transition, but necessary given the export model is difficult to sustain,” Liu said, highlighting China’s manufacturing, which accounted for 30% of global capacity. 

Low domestic consumption means overseas consumers need to purchase China’s excess production, which squeezes out other countries in global trade and raises tensions, he added. 

A meeting between China and U.S. leaders will likely result in a trade deal, a prominent policy advisor recently told MNI. (See MNI INTERVIEW: China-US Deal Possible)

COMSUMPTION 

Liu said policymakers should combine short-term subsidies with income boosting measures to ensure sustainability and called on authorities to expand the trade-in scheme to all consumer goods to boost industry economy-wide, not just among specific sectors. Retail sales would grow by about 5% y/y in 2025 from 2024’s 3.5% low thanks to a series of stimulus measures, he predicted.

Beijing’s commitment this month at the Two Sessions meeting to stabilise asset prices, particularly among property and the stock market, should also support consumption via the wealth effect, he added.

Authorities could also consider longer-term reforms to support consumption, such as a transfer of state-owned enterprise shares into the national pension fund to boost retirement income and spending confidence, and a relaxation of the household hukou registration system, which would bolster disposable incomes of rural to urban migrants, he added.

The Government should also focus on promoting services consumption, such as education, healthcare and financial services, to create a more accessible consumption environment, which will encourage the public to spend, he said.

China will need to increase consumption’s contribution to GDP to about 60% from 2024’s 44.5% to ensure 5% growth this year and offset potentially weaker exports, advisors recently told MNI. (See MNI: China Needs Services, Childcare Subsidy)