Chi Fulin: New Development Model Supports the Construction of an Economic Powerhouse
The "15th Five-Year Plan" outline proposes promoting the formation of more economic development models characterized by domestic demand leadership, consumption drive, and endogenous growth. This is a major deployment based on new changes in China’s developmental stage and the new situation of the international development environment; it is also a strategic task for the transition from a large economy to an economic power. We must base our efforts on national conditions, deepen our understanding of objective laws [1] by summarizing development experiences, and clarify our primary direction of attack. We must better coordinate the present and the long term, as well as the domestic and the international, taking reform and innovation as the fundamental driving force to accelerate the formation of a higher-level dynamic equilibrium where consumption and investment interact positively and supply and demand are efficiently matched.
Important Experience: Optimizing Development Orientation, Pattern, and Structure
The characteristics of a large-country economy are dominance of domestic demand and internal recyclability. Looking across the world, economic powers generally possess a strong driving force from domestic demand, particularly consumption, for economic growth. For our country, moving from a large economy to an economic power requires, first, leveraging the unique advantage of internal recyclability within a hyper-large-scale market to firmly grasp the initiative of development amid complex and volatile situations. Second, it requires significantly improving the quality and efficiency of development on the basis of continuously expanding the total economic volume, forming more economic development models led by domestic demand, driven by consumption, and sustained by endogenous growth. Third, it requires continuously enhancing global influence through high-level opening up, assuming international responsibilities commensurate with our economic strength and international status, and actively participating in and leading global economic governance.
Since the 18th CPC National Congress, facing the accelerating evolution of changes unseen in a century and the transition of domestic economic development stages, the Party Central Committee has assessed the situation and made scientific judgments. It has promoted the systemic optimization and reshaping of the economic development orientation, pattern, and structure, initially forming a new situation where domestic demand drives economic growth, accumulating important experience for building an economic power.
First, promoting a shift in development orientation, with high-quality development as the theme. Under the new development orientation, we utilize major strategies, policies, projects, and engineering works as focal points to continuously solve development difficulties and cultivate developmental advantages. On one hand, greater emphasis is placed on innovation-driven growth. By 2025, China's total social R&D investment intensity will increase to 2.8%, and its innovation index ranking will rise to 10th in the world; fields such as the digital economy and new energy vehicles have entered the world's leading ranks. On the other hand, there is a greater emphasis on the simultaneous increase of quantity and quality. While achieving steady growth in total economic volume, the construction of a modernized industrial system has yielded significant results, with the added value of manufacturing accounting for approximately 30% of the global total and the proportion of high-tech manufacturing steadily climbing. During the "14th Five-Year Plan" period, the pace of green and low-carbon transition accelerated, the quality of the ecological environment continued to improve, and the installed capacity of non-fossil energy power generation exceeded that of fossil fuels. In 2025, energy consumption per unit of GDP decreased by 5.1%; the "background color" of development is greener, and its "karat value" [2] is higher.
Second, promoting the reshaping of the development pattern, emphasizing the domestic cycle as the mainstay and the mutual promotion of domestic and international dual circulation. The strategy of expanding domestic demand is taken as the key support for responding to risks and challenges and ensuring developmental security. From 2013 to 2024, the average contribution rate of domestic demand to China's economic growth reached 93.1%. In 2025, foreign trade dependency further declined, keeping the initiative of development firmly in our own hands. During the "14th Five-Year Plan" period, the average contribution rate of final consumption expenditure to economic growth reached about 60%, an increase of about 10 percentage points over the "13th Five-Year Plan" period, further highlighting consumption's role as the main engine of economic growth.
Third, promoting the optimization of development structure to solve the problem of unbalanced regional and urban-rural development. A series of major strategies have been deeply implemented; the economic growth rate of the central and western regions has been faster than that of the east for many consecutive years, the per capita GDP gap continues to narrow, and a spatial layout of complementary advantages has initially formed, making regional development more coordinated. Simultaneously, urban-rural integration has advanced in depth. In 2025, the urbanization rate of the permanent population reached 67.9%, the quality and efficiency of new-type urbanization improved, the income ratio of urban and rural residents narrowed to 2.34:1 as of 2024, and the mechanism for the two-way flow of urban and rural factors [3] has been continuously improved.
Fourth, promoting the leap in the level of opening up, shifting from the flow of goods and factors toward institutional opening up. While consolidating our advantages in opening up, we take the service industry as an important focus for high-level opening up, with the scope of opening in finance, telecommunications, and medical care continuously expanding. We are steadily advancing institutional opening up in terms of rules, regulations, management, and standards. Pilot Free Trade Zones have been upgraded and expanded to 22, and the Hainan Free Trade Port has achieved independent customs operations; the Foreign Investment Law was promulgated, and the negative list for foreign investment access has been continuously shortened. We have promoted the process of autonomous and unilateral opening up, implementing zero tariffs on 100% of tariff items for all least-developed countries with which we have diplomatic relations, and implementing unilateral visa-free or mutual visa exemption policies for more than 70 countries. China's status in global economic governance has significantly improved; the scale of trade in goods has ranked first in the world for many consecutive years, and our contribution rate to global economic growth has long remained at around 30%, making us the largest engine of global economic growth.
Important Tasks: Synergistic Efforts from Three Dimensions
A strong domestic market is both an important support for building the new development pattern and the inherent advantage of a large-country economy. In the next 5 to 10 years, China will be in a historical window for economic transformation and structural adjustment, possessing the conditions to build an economic power supported by a new development model by releasing the huge growth potential contained in economic transformation and upgrading. Achieving this strategic goal requires synergistic efforts across three dimensions: making up for consumption shortfalls, strengthening trade in services, and actively expanding imports.
Regarding making up for consumption shortfalls, we must take precise actions to form a positive interaction between supply and demand. First, build a hyper-large-scale market characterized by "Made in China + Consumed in China." According to relevant estimates, in 2024, China's manufacturing added value accounted for nearly 30% of the global total, while final consumption accounted for about 13% of global consumption. A preliminary estimate suggests that if the latter reaches the level of the former, it will add no less than $10 trillion to the consumer market. If a hyper-large-scale market with both strong supply and demand is formed, its global influence will further increase, bringing broader market, investment, and growth opportunities to the world through China’s large market. Second, expand the breadth and depth of the market with service-oriented consumption as the lead. In 2025, the proportion of per capita service consumption expenditure of urban and rural residents in China reached 46.1%, but there is still significant room for improvement compared to developed countries. In the next 10 years, China will be in a period of rapid growth for service-oriented consumption. By 2035, if the proportion of service consumption by Chinese residents rises to above 55%, it will release enormous consumption potential. Entering the era of rapid AI development, the integration of material consumption and service consumption will become a major trend, spawning a large number of new business forms and models, injecting strong impetus into the construction of an economic power. Third, increase the rate of household consumption. In 2024, China's household consumption rate was 39.9%, still 10 to 30 percentage points behind developed countries. By 2030, the household consumption rate has the potential to rise to about 45%, and further to over 50% by 2035. By then, the scale of China's household consumption market may reach 110 trillion yuan, the contribution of consumption to economic growth will increase significantly, and the pattern of domestic demand leadership and consumption drive will become more firmly established.
Regarding strengthening trade in services, the focus should be on improving the operational efficiency of the domestic market to achieve connectivity between domestic and international markets. Service trade is the key to a country's economic competitiveness and serves as the "lubricant" and "adhesive" connecting domestic and international cycles. Currently, in the price of global final products, the value-added of service links exceeds 60%. Leveraging the engine role of service trade and promoting its increasing proportion is an inevitable requirement for building an economic power. In 2024, more than 54% of global service trade was delivered digitally, while China's proportion in the same period was relatively small. At present, the basic conditions for the development of China’s digital trade—such as market demand, technical supply, and corporate entities—have basically taken shape. We have the conditions to promote the vigorous development of digital trade and achieve the goal of increasing the proportion of digitally deliverable service trade to over 50% by 2035. Strengthening service trade and building a major service trade nation depends on breakthroughs in institutional opening up. In this process, we must actively layout and create various forms of "opening highlands," [4] promoting the integration of service trade in the Guangdong-Hong Kong-Macao Greater Bay Area and advancing the construction of the Hainan Free Trade Port aligned with the world's highest levels of openness. We must also further shorten the national version of the negative list for cross-border service trade and accelerate the alignment of rules, regulations, management, and standards with international norms.
Regarding actively expanding imports, we must enhance our discourse power [5] in formulating economic and trade rules while significantly increasing the global attractiveness and influence of China’s large market. In 2025, China's import scale reached 18.5 trillion yuan, making it the world's second-largest import market for 17 consecutive years. Building an economic power requires competitive exports, but it also requires an increase in the scale of imports to promote balanced trade development. This is both a "booster" for meeting the people's needs for a better life and a "catalyst" for forcing the transformation and upgrading of domestic industries; above all, it is an important task for building a strong domestic market. In practice, we can rely on relevant platforms and market construction to enhance the global influence of "Chinese prices." In the process of actively expanding imports and building a large import market, we can attract and aggregate high-quality factors. For example, moving from "attracting capital" to "selecting capital" to make up for shortfalls in the industrial chain; actively building scientific research platforms and R&D centers for multinational corporations to create a global talent pool; and relying on rich application scenarios and complete industrial supporting facilities to attract the local transformation of global scientific and technological innovation achievements. We should play the important role of the world's second-largest import market in driving the international economic cycle, proactively expanding imports of energy products, high-quality consumer goods, and related services from regions such as ASEAN.
Important Measures: Using Reform Methods to Solve Development Problems
Currently, China's economic operation faces the structural contradiction of "strong supply and weak demand." We must focus on deepening structural reforms and inject strong impetus into building an economic power supported by a new development model through the synergistic efforts of investment and consumption, urban and rural areas, and the government and the market.
First, rationalize the relationship between consumption and investment, achieving a dynamic balance between supply and demand while expanding effective demand. Consumption is the end point of the economic cycle and also a new starting point. To adapt to the major trend of urban and rural residents' consumption structures upgrading from material-based to service-based, we must shift the focus of investment toward a balance of "people" and "things," insisting on the close integration of investing in physical assets and investing in human capital to better resolve the structural contradiction between investment and consumption. In the future, if tens of trillions or even hundreds of trillions of yuan are "invested in people" to guarantee and improve livelihoods, it will promote the formation of a long-term mechanism where residents are able, dare, and willing to consume, making consumption the primary driver of economic growth. At the same time, we must use consumption upgrades to force the optimization of the investment structure. To meet the new requirements that the upgrading of consumption structures places on the investment system, we should substantially relax market access for service industries such as medical care, health, and education, and support and guide domestic and foreign capital into areas where livelihoods are lacking, stimulating and creating effective demand through high-quality supply.
Second, adhere to integrated urban-rural development, releasing huge domestic demand potential by promoting people-centered new-type urbanization. Currently, China has generally entered the late stage of industrialization, but there is still considerable room for improvement in the level of urbanization. It is estimated that for every 1 percentage point increase in China's urbanization rate, more than 200 billion yuan of new consumption demand can be added annually. By 2035, if the urbanization rate of the registered population [6] rises to around 65%, it will form an important impetus for building a strong domestic market. The key to promoting people-centered new-type urbanization lies in institutional innovation. We must coordinately deepen the reform of the household registration system [7] and promote the urbanization of the agricultural transfer population, enabling farmers moving to cities to settle down and stabilize their consumption. We should steadily and orderly promote the integration of city clusters and the metropolitan area development, and optimize the spatial layout of population and industry. Proposing that while not increasing the burden on residents, we should establish and improve the rural old-age insurance system, and consider accelerating the establishment of a basic public service system with roughly equivalent standards across urban, rural, and regional areas.
Third, properly handle the relationship between the government and the market, enhancing the vitality of the domestic market by optimizing the business environment. On one hand, premises on clear functional boundaries, we must improve the effectiveness of macroeconomic governance. We need to clarify the relationship between powers and responsibilities, optimize the division of administrative and financial powers among governments, and stimulate the enthusiasm of local governments in creating the environment, investing in people, and boosting consumption, thereby forming a combined force to build a strong domestic market. On the other hand, we must break down barriers to factor mobility through market-oriented reforms. We should advance the construction of a national unified large market in depth, accelerate market-oriented reforms of factors such as land, labor, capital, technology, and data, and ensure that all types of business entities use productive factors equally according to the law. We must further promote the construction of a government based on the rule of law and strengthen the fundamental position of competition policy; and we must enhance international competitiveness through institutional opening up, taking the opening of the service industry as a major highlight to enhance the global attractiveness of the domestic market through the bridging of domestic and international market rules.