The current economic climate in China is raising concerns due to a noticeable weakness in domestic demand, as acknowledged by the National Development and Reform Commission (NDRC). The commission is currently assessing strategies and measures for tackling these challenges in the upcoming year of 2027. Economists have pointed out that the Chinese economy has become overly reliant on investment, and this dependency has significantly hindered efforts to address existing structural contradictions within its macroeconomic strategy.
Recent data from the National Bureau of Statistics highlights that consumer spending in China has shown minimal growth, with total retail sales of consumer goods from January to September 2026 only increasing by a mere 1.1% compared to the previous year. Additionally, per capita consumer spending has seen just a nominal growth of 3.6% in the first three quarters.
Analysts have expressed their concerns regarding a structural imbalance in the Chinese economy characterized by “strong supply and weak demand.” This imbalance not only heightens the risk of surplus production and declining prices but also compels decision-makers in Beijing to prioritize the resolution of insufficient domestic demand in their macroeconomic agenda for 2027. Addressing this issue has become paramount to preventing the further widening of the supply-demand gap.
A report from Bloomberg on November 7 indicates that the NDRC has publicly recognized the challenge of weak demand and is actively deliberating on measures for the next year. This acknowledgment coincides with the government’s preparation of economic support measures and precedes the upcoming Central Economic Work Conference, a significant meeting that shapes future economic policies.
During discussions between the NDRC director and several executives from private enterprises, various concerns were raised regarding the authorities’ efforts to support the economy. Key issues included the need for enhanced financing channels, support for energy demand, and addressing the chaos resulting from excessive competition.
These discussions have unveiled the profound challenges faced by Beijing as they devise the economic agenda for the following year. A crucial task will be balancing the support for effective investment while simultaneously preventing further declines in consumer demand, which is already lagging behind domestic supply capabilities.
In a commentary published on November 7, Jean Pisani-Ferry, a professor of economics at prestigious institutions including the Paris School of International Affairs, the Bruegel Institute in Brussels, and the Peterson Institute for International Economics in Washington, explored the long-standing structural imbalances in China’s economy. He noted that industrial output represents approximately a quarter of China’s GDP, yet the industrial sector has expanded excessively while the service sector has failed to grow correspondingly. Economically, growth has been predominantly driven by infrastructure and real estate investment in the past, with a current dependence that is almost entirely on foreign trade. Alarmingly, household consumption accounts for less than 40% of China’s GDP, significantly below the global average of about 63.9%.
These imbalances are not new, and various internationally accepted solutions exist; however, the consensus on addressing these issues has failed to translate into meaningful action over the past two decades. Economic policies have made little progress in correcting these disparities. The Chinese government’s “15th Five-Year Plan” failed to instill confidence in households regarding savings prospects and did not make provisions for increasing wage income or establishing a genuine social security system. Instead, efforts have been focused on promoting foreign trade, escalating investment in critical infrastructures, and a misguided obsession with investment, without effectively stimulating consumer spending.
In conclusion, as China’s leadership grapples with these significant economic challenges, it is clear that a strategic reevaluation is necessary to foster robust domestic demand, stabilize the economy, and ensure a balanced growth trajectory for the future. Without decisive action and a shift in focus from investment to consumption, the road ahead may remain steep and fraught with difficulty.