If there is a Chinese analogue to Nero’s fiddling while Rome burned, it is the country’s latest five-year plan. The policy blueprint — which sets out China’s economic strategy for the years ahead — was approved on Thursday by the National People’s Congress in Beijing. Chapter 15, titled “Vigorously Boosting Consumption,” proclaims that the Chinese consumer is finally going to start earning more and spending more.
This promise, which Beijing has been making for more than two decades, matters far beyond China. If Chinese consumers started spending more, it would help reduce the country’s reliance on exports to fuel its economy, a strategy that now floods world markets with Chinese-made goods and creates huge trade surpluses for China and persistent tension with trading partners such as the United States.
The situation is unlikely to change under the new plan, which mostly doubles down on China’s longstanding approach of prioritising export-oriented industries and technological development instead of creating a truly consumer-driven economy. Even if Communist Party leaders wanted to unleash more spending, formidable obstacles stand in the way, including a workforce increasingly trapped in insecure, low-wage employment, a rapidly ageing and shrinking population, and a weak social safety net that encourages people to save for emergencies.
China’s people, perhaps more than at any time in the last few decades, are in no mood to go out and splurge. Many have been airing growing anxiety online about falling incomes and scarce jobs. The average income was just over $500 a month in 2025. Unemployment is high. A fundamental shift that has taken place in China’s labour market is the root cause of these problems.
Since the early 2010s, intensifying global economic competition, automation, the pandemic-era closure of countless businesses, slowing economic growth, and China’s protracted property slump have all combined to eliminate millions of manufacturing and construction jobs. This has driven countless workers into a growing service sector that requires fewer skills and offers lower pay.
An estimated 200 million people, or at least one-quarter of China’s workforce, are now engaged in insecure “gig” employment—delivering meals or packages, driving ride-hailing cars, selling goods online, or doing other short-term work. According to a study last year, nearly half of gig workers have little to no social safety net — healthcare, pension, unemployment, housing, or maternity benefits — a problem worsened by chronic government underinvestment in social services. Advances in technology have given companies a precise view of seasonal demand and simplified recruiting, enabling them to hire and fire workers as needed.
Adding to worker insecurity is China’s household registration system, which restricts access to social services like schooling and health care outside one’s hometown. This effectively ensures that people from China’s vast countryside serve as cheap migrant labour for megacities like Beijing, Shanghai, and Shenzhen. Reform of the registration system has been discussed for decades, but eliminating it would shift enormous welfare costs onto those cities, which currently reap benefits from migrant labour without shouldering social costs.
These are hardly the foundations of a vibrant consumer economy, and the future looks no better. The real estate crash, now five years old, has left homeowners paying mortgages on apartments they can’t sell. New families are a key driver of spending on homes, appliances, and cars. But China’s people are marrying less frequently and having fewer babies: The population fell for the fourth straight year in 2025, and the fewest babies were born since the founding of the People’s Republic of China in 1949. Fewer people, of course, means fewer consumers.
The deeper question may be whether the Chinese Communist Party’s pledges to give consumers more of a role in the economy are real — or an empty pledge to placate critics. Consumer spending in China has hovered at 40% or less of China’s GDP for years (compared to 65% in the US).
Increasing the role of consumer spending in China’s economy would mean surrendering some state control to the people, something the Communist Party is loath to do. While the US and Europe typically stimulate spending by putting money in consumers’ hands through tax cuts or social safety nets, China’s government manages the economy primarily through companies. It directs investment capital to them and grants subsidies to execute industrial policies.
The New York Times