Chinese authorities are set to intensify efforts with more robust measures to effectively expand domestic demand. According to a recent press conference held by the National Development and Reform Commission (NDRC), a plan for implementing the strategy to expand domestic demand for the 2026-2030 period is being urgently drafted and studied.
On the investment front, the focus will be on leveraging the peak construction season in the third quarter to accelerate the disbursement and use of 800 billion yuan in new policy-based financial instruments, as well as speeding up the issuance and use of special bonds. In terms of consumption, the emphasis will be on tapping into the potential of service consumption and promoting the consumption of smart products.
In the first half of the year, domestic demand indicators faced pressure but showed notable structural highlights. For investment, emerging sectors performed well, with investment in high-tech industries growing by 4.6% year-on-year. For consumption, new scenarios for service consumption emerged rapidly, with retail sales of services rising by 5.3% in the first half, while consumption of upgraded goods also grew quickly.
The Political Bureau of the CPC Central Committee, when outlining economic work for the second half of the year, stressed the need to "strengthen counter-cyclical adjustments, intensify efforts to expand domestic demand, and optimize supply." To boost consumption, Zhou Hongwei, Deputy Director General of the Department of National Economy at the NDRC, stated that the next steps will include deeply implementing the employment-first strategy, continuing large-scale vocational skills training, and increasing residents' incomes through multiple channels. He also mentioned tapping into the potential of service consumption, expanding high-quality supply to meet the consumption needs of different groups, improving life service consumption, promoting the consumption of smart products, increasing the effective supply of new-generation intelligent terminal products such as AI smartphones and computers, smart wearables, and intelligent robots, and expanding agent services.
Yuan Haixia, President of the China Chengxin International Credit Rating Institute, noted that service consumption has maintained rapid growth this year, significantly outpacing goods consumption, and has become a key pillar for consumption growth. She pointed out that the share of service consumption in residents' consumption expenditure in China is still lower than that in developed economies, meaning the potential for service consumption has not been fully released, and the supply of high-quality services needs to be further strengthened. "Going forward, it is necessary to deeply implement the action plan to expand capacity and improve quality in the service industry, continuously enrich consumption scenarios around key areas such as cultural tourism, healthcare, sports events, the performance economy, digital consumption, green and smart consumption, and offline physical retail, expand the supply of high-quality services, create effective demand with high-quality supply, and further enhance the sustainability of consumption growth," Yuan said.
On the investment side, Zhou Hongwei stated that efforts will be coordinated to advance the construction of major projects, seize the peak construction season in the third quarter, accelerate the disbursement and use of 800 billion yuan in new policy-based financial instruments, and speed up the issuance and use of special bonds. The government will also increase the proportion of investment in livelihood-related projects to drive demand recovery, promote the implementation of the 109 major projects proposed in the "15th Five-Year Plan" outline, and ensure project preparation and resource guarantees. The planning and construction of the "Six Networks" will be steadily advanced, and the vitality of private investment will be continuously stimulated.
Regarding the planning and construction of the "Six Networks," it is learned that most major individual projects scheduled to start within the year have already begun, and a large number of projects are being accelerated. Examples include the Yangtze-to-Han River Water Diversion Project of the Middle Route of the South-to-North Water Diversion Project, a major artery of the national water network. In the next steps, relevant authorities will focus on removing blockages in hardware interconnection, rule and standard alignment, information sharing, and market access, thereby improving sustainable operational service capabilities. From the perspective of investment funds, the 800 billion yuan in new policy-based financial instruments is expected to be deployed intensively in the second half of the year.
Luo Zhiheng, Chief Economist at Yuekai Securities, stated that policy-based financial instruments can not only supplement capital for major projects but also leverage bank loans and social capital to follow, creating a strong investment multiplier effect. This will provide robust support for the construction of key infrastructure such as the "Six Networks." At the same time, the intensity of fiscal funds related to investment and construction will also be significantly increased in the second half of the year. Luo noted that the quota for new special bonds in 2026 is 4.4 trillion yuan, with about 2.3 trillion yuan expected to be issued in the second half. As new projects complete preliminary preparations and enter the implementation phase, the pace of special bond issuance and fund utilization is expected to accelerate.
Wang Qing, Chief Macro Analyst at东方金诚 (Dongfang Jincheng), stated that in the second half of the year, driven by the planning and construction of the "Six Networks," the growth rate of infrastructure investment is expected to return to positive territory, providing key support for the stabilization of overall investment.