Calls grow for China's household sector to be bigger economic driver

Chinese government advisers are stepping up calls to make the household sector's contribution to broader economic growth a top priority at Beijing's upcoming five-year policy plan, as trade tensions and deflation threaten the outlook.

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Leaders are gathering proposals for their 15th five-year plan, a voluminous document that lays out priorities up to 2030. The plan is expected to be endorsed at a December Communist Party conference and approved by parliament in March.

Policy advisers told Reuters while they expect the document will elevate household consumption to a top goal in principle, it is likely to stop short of laying out an explicit target.

Household consumption currently accounts for 40% of gross domestic product (GDP) — some advisers propose China should aim for 50% over the next two five-year cycles.

Economists have long urged Beijing to switch to a consumption-led economic model and rely less on debt-fueled investment and exports for growth.

While China has so far largely withstood pressures from higher US tariffs, fresh worries about industrial overcapacity, factory deflation and the resulting stress on jobs and incomes have heightened calls for a shift in long-term strategy.

"Relying on external demand makes us vulnerable to global shocks," a policy adviser said on condition of anonymity due to the topic's sensitivity.

"We should strengthen domestic consumption as a key driver of growth and economic transformation," said the source, echoing calls from two other advisers Reuters spoke with.

A fourth adviser said his proposals would not include this recommendation as "this is not something that can be easily achieved without the correct policies and reforms."

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