Premier Li Qiang highlighted “boosting consumption” as one of the top policy priorities of the central government this year in his Government Work Report delivered at the opening of the third session of the 14th National People’s Congress on March 5. In less than two weeks, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a 30-point special action plan, outlining strategic measures to stimulate domestic demand and invigorate consumption across the board chiefly by raising people’s incomes and reducing their financial burdens.
Investment, exports, and consumption — often termed the “troika” of economic growth — have long driven China’s development. The rollout of the new stimulus package signifies the full mobilization of consumption as a core growth driver, positioning it as the most robust force in the trio. The renewed emphasis on boosting consumption reflects an inevitable shift in China’s economic strategy, driven by three critical factors:
First, the declining returns on infrastructure investment. After decades of robust development, the country’s infrastructure and public facilities, as well as overall housing supply, have reached saturation. The marginal benefits of investment-driven growth have continued to diminish over recent years, leaving limited room for further reliance on this growth model.
Second, the heightened export uncertainties. Since Washington designated China as its key strategic rival and launched a trade war against the country, Chinese exports to the United States have faced escalating barriers. With the protectionist US President Donald Trump 2.0 in full flood, the prospects for Sino-US trade are not optimistic. At the same time, China’s exports to the rest of the world are also encountering risks and challenges.
Third, an untapped domestic consumption potential. The experiences of developed economies indicate that when the per capita GDP in an economy exceeds $10,000, significant shifts occur in consumption patterns. China’s per capita GDP has just crossed this threshold. The domestic consumption market possesses vast potential in three key areas: traditional consumption, which still has room to grow; service consumption, which offers significant opportunities; and new forms of consumption — such as artificial intelligence-driven appliances, new energy-driven vehicles and livestream e-commerce — presenting immense possibilities for growth.
The special action plan adopts a holistic approach to revitalizing consumption — enhancing purchasing power, improving product quality, enhancing people’s willingness to consume, and removing the constraints on consumption — marking the most comprehensive policy initiative of its kind in over four decades since the beginning of China’s reform and opening-up process. Two particularly significant aspects of the plan stand out:
Foremost, people-centric reforms. The plan introduces 30 targeted measures, including developing a child care subsidy system, increasing financial aid for certain students, enhancing basic pension benefits and medical insurance subsidies for both urban and rural residents, implementing a moderate increase in basic pensions for retirees, improving wage growth mechanisms, and promoting the bridging of public holidays with paid annual leave. These measures span the full life cycle, addressing needs from childbirth to retirement.
Second, promote new patterns of consumption. The plan encourages the expansion of cultural and sports tourism, as well as tech-driven consumption. Key initiatives include extending operating hours for tourist sites, streamlining approvals for mega events, and promoting winter sports tourism by establishing high quality attractions and resorts. The plan also encourages integrating AI with consumption, accelerating the development and application of new technologies and products, including autonomous driving, wearable smart devices, ultrahigh-definition video, brain-computer interfaces, robotics, and additive manufacturing. In addition, the plan supports low-altitude consumption by advancing sectors such as low-altitude tourism, aerial sports, and consumer-grade drones. These emerging consumption models will cater to upgraded consumer demands and unlock new growth potential in the market.
By systematically tackling issues that constrain consumers’ purchasing power, confidence and desire to spend, the plan represents a substantial shift in China’s economic playbook.
HK at strategic crossroads
Expectations for a post-pandemic “explosive surge” in the inflow of visitors from the Chinese mainland to Hong Kong have not materialized. Instead, a reverse trend has emerged — Hong Kong residents are flocking to Shenzhen, Guangzhou, and other neighboring mainland cities for shopping and leisure. This suggests that the central government’s consumption stimulus policy will create both opportunities and challenges for Hong Kong. The city would profit significantly from the policy by offering tailored services to mainland visitors. Conversely, Hong Kong would risk not only missing out on the opportunities arising from this policy but also losing more local consumer expenditures if the city is reluctant to innovate and remains reliant on low-effort approaches.
In this context, Hong Kong must adapt strategically and give priority to promoting three key areas in order to capture the emerging opportunities. The three key areas are:
Cultural tourism. Moving beyond reliance on shopping tours and group travel, Hong Kong must cater to young mainland visitors seeking personalized travel experiences. Developing immersive attractions, niche tourism (such as heritage trails and digital art exhibitions), and flexible travel packages could enhance the city’s appeal to visitors.
Education. With rising costs and geopolitical tensions deterring mainland students from studying in Western countries, Hong Kong is well-positioned to build its “study in Hong Kong” brand, as proposed in the 2024 Policy Address. Chief Executive John Lee Ka-chiu’s push to enhance academic quality and global recognition of local higher educational institutions aligns with growing demand of mainland students for accessible, world-class education.
Healthcare. The mainland is opening its healthcare sector to external institutions, launching pilot programs that allow these medical institutions to operate on the mainland. Hong Kong’s globally renowned medical expertise and technology offer the city a unique edge in this area. With a world-class healthcare system and bilingual service capabilities, Hong Kong could attract a growing number of mainland residents seeking medical services by proactively promoting such services.
Xia Baolong, director of the State Council’s Hong Kong and Macao Affairs Office, has repeatedly urged Hong Kong to “embrace change and seize opportunities” amid shifting dynamics. The national consumption drive will reshape markets profoundly, and Hong Kong’s ability to innovate — rather than “wait for opportunities” — will determine whether it can grasp the opportunities arising from the policy. Inaction risks not only missing opportunities but also further outflow of local consumers. By leveraging its strengths in tourism, education, and healthcare, Hong Kong can transform challenges into catalysts for growth.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
