Tourists buy flowers at Dounan Flower Market during the May Day holiday in Kunming, Southwest China’s Yunnan province, May 5, 2026. [Photo/Xinhua]
In December, the annual Central Economic Work Conference identified boosting consumption and expanding domestic demand across the board as a key priority for economic policy.
The task is not merely a short-term response to economic challenges. It also reflects a broader strategic goal: transforming China from one of the world’s largest consumer markets into a truly strong consumer economy.
Achieving that goal will require not only policy support, but also a gradual shift in consumer behavior — from cautious spending toward more confident and self-assured consumption.
China is already one of the world’s largest consumer markets. With a population of more than 1.4 billion, the country has maintained its position as the world’s second-largest consumer market for years. Yet scale alone does not necessarily translate into strength.
Compared with many developed economies, China’s final consumption expenditure still accounts for a relatively smaller share of GDP.
In economies such as the United States and the United Kingdom, final consumption has long remained above 80 percent of GDP, while China’s ratio remains below 60 percent.
More fundamentally, the difference lies in consumer psychology. Influenced by long-standing cultural traditions that emphasize living within one’s means and preparing for future uncertainties, Chinese households have historically maintained high savings rates and relatively cautious spending habits.
Such prudence was understandable, and even beneficial, during earlier stages of development. However, as China enters a new phase in which domestic demand is expected to play a greater role in driving growth, excessive caution can become a constraint on economic vitality.
The transition from a large consumer market to a strong consumer economy is not simply about how much people spend. It is also about how and why they spend.
Consumption driven by confidence, aspirations and quality-of-life improvements is fundamentally different from spending limited to essential needs or shaped by concerns about future uncertainty.
It is important to clarify that more confident consumption does not mean encouraging extravagance or wasteful spending.
Rather, it reflects a consumption mindset supported by stable income growth, stronger social protection and positive expectations about the future.
Confidence is the first pillar. When consumers believe their incomes will continue to grow steadily, when they feel adequately protected against major life risks, and when concerns about healthcare and retirement are reduced, they are more likely to allocate resources between consumption and savings in a balanced and rational manner rather than saving excessively for unforeseen contingencies.
Choice is another important dimension. Consumption upgrading is, at its core, a transition from focusing on whether products are available, to focusing on whether they are desirable and valuable.
As incomes rise and markets become more diversified, consumers gain greater freedom to choose among premium domestic brands, international products, physical goods and service-based experiences. Such freedom of choice is itself a reflection of stronger consumption capacity.
Equally important is rationality. A mature consumer culture is not about purchasing the most expensive products, but about making informed decisions based on actual needs and personal preferences.
In today’s highly transparent information environment, consumers are increasingly capable of distinguishing genuine value from marketing hype and making purchasing decisions that balance quality, individuality and sustainability. Such consumption is both higher in quality and more sustainable over the long term.
The shift toward more confident consumption will not happen overnight. Nor can it be achieved through slogans alone. It requires coordinated efforts from the government, businesses and society.
Income growth remains the foundation. Without stable and sustainable income growth, stronger consumption cannot be maintained.
Expanding employment opportunities, improving income distribution and increasing household earnings are essential.
Measures such as improving wage growth mechanisms, refining policies related to factor-based income distribution and broadening channels for property income all help strengthen consumer spending power.
Social security serves as an equally important pillar. One reason Chinese households traditionally save a large portion of their income is uncertainty surrounding major expenditures such as healthcare, education and retirement.
Further improving the multi-tiered social security system and strengthening the social safety net can help reduce such concerns.
As confidence in long-term security increases, the need for precautionary savings is likely to decline, creating greater room for consumption.
Supply-side improvements are also critical. Consumers can only spend with confidence when high-quality products and services are available.
Continued industrial upgrading, increased supply of mid to high-end consumer goods and the development of emerging consumption sectors — including service consumption, digital consumption and green consumption — will provide consumers with more attractive options and better experiences.
Meanwhile, a safe and trustworthy consumption environment remains indispensable. Stronger protection of consumer rights, more effective regulation against counterfeit and substandard products, and more accessible channels for resolving disputes can all help strengthen confidence in the marketplace.
A consumption environment where consumers feel protected is itself a powerful driver of spending.
Ultimately, the transition from a large consumer market to a strong consumer economy represents more than a change in economic indicators. It reflects a broader transformation in China’s development model.
A stronger consumer economy would mean a more balanced growth structure, higher living standards for the country’s 1.4 billion people and a fuller release of the potential embedded in China’s vast domestic market.
The gradual shift from cautious spending to confident consumption is one of the most visible manifestations of that transformation.
When consumers feel comfortable paying for better quality, embracing new experiences and pursuing lifestyles that reflect their aspirations, the vision of a stronger consumer economy moves closer to reality.
As the Central Economic Work Conference emphasized, efforts should focus on enhancing consumer spending power and strengthening their willingness to consume.
That objective is not only an important economic task, but also a shared aspiration of millions of households. Enabling people to consume with greater confidence and enjoy a better quality of life lies at the heart of building a stronger consumer economy in the years ahead.
The writer is a scholar at Renmin University of China and a professor at the university’s School of Public Administration and Policy.
The views do not necessarily reflect those of China Daily.
Tanks to chinadaily.com.cn
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