China charts a new course for economic stability

BEIJING, Jan. 21 (Xinhua) -- China's latest GDP figures show an economy holding firm in a troubled world. Growth in 2025 proved more resilient than many had expected. Yet the numbers point to something beyond mere endurance: they signal the early results of a strategic economic rebalancing that is increasingly the central theme of policy.

As China enters the first year of its 15th Five-Year Plan (2026-2030), its economic trajectory is defined less by headline growth than by a move toward greater underlying stability and balance.

Policymakers are fine-tuning their approach, prioritizing the expansion of domestic demand, strategic investment in human capital, and fostering innovation to build intrinsic stability for sustained development.

STEERING STABILITY

China's economic policy is increasingly calibrated, favoring targeted support that can underpin long-term resilience over sweeping stimulus measures that risk fueling financial or sectoral imbalances.

"Evaluating 2026 requires a medium- to long-term view of structural change," said Wang Han of Industrial Securities. "The goal is to improve economic quality, not just chase a growth rate."

The central bank's recent actions exemplify this nuance. While it implemented measured cuts to interest rates and mortgage requirements, analysts at Nomura described the moves as "low-profile easing", or careful adjustments designed to provide support without fueling excessive speculation in equity markets.

On the fiscal front, Vice Minister of Finance Liao Min said Tuesday that fiscal spending will be further expanded this year, building on the proactive levels set for 2025. He emphasized that the ministry has fully taken into account the medium- to long-term sustainability of public finances, with a focus on strengthening future development. Efforts will be directed toward channeling more fiscal resources into boosting consumption, investing in human capital, and strengthening livelihood protection.

To external observers, this represents a meaningful step toward economic maturity. "Recent policy signals tell a different story -- one of strategic transformation, resilience and sustained fiscal progress," noted Chris Sherrard, editor-in-chief of The Irish News, contrasting this with a foreign narrative preoccupied with the growth numbers.

SHIFTING GEARS

Achieving intrinsic stability necessitates a structural rebalancing. With the traditional engines of investment and export moderating or facing uncertainties, policymakers are turning to domestic consumption and technological advancement for sustained growth.

"China is at a critical phase in the transition from old growth drivers to new ones," noted Kang Yi, head of the National Bureau of Statistics. "Emerging growth drivers are gaining momentum, which will help counter downward pressure and create impetus for growth."

Expanding domestic demand has been highlighted as a primary task for 2026, according to the Central Economic Work Conference held in December last year.

Consumption, particularly in services, is slated to play a larger role in the economy. Analysts point to sectors such as elderly care, green technology, and cultural tourism as key areas of potential expansion.

Wang Changlin, deputy head of the National Development and Reform Commission (NDRC), told a press conference Tuesday that China will formulate and release an implementation plan this year for its strategy to expand domestic demand for the 2026-2030 period.

Alongside efforts to stimulate consumption, China is turning to innovation to drive productivity and future growth. Goldman Sachs notes that the country's long-term growth will rely more heavily on total factor productivity, with technologies like artificial intelligence expected to boost growth. Moody's also expects technology to propel industries ranging from advanced manufacturing to smart appliances, driving efficiency and supporting revenue.

INVESTING IN PEOPLE

Particularly noteworthy in China's evolving policymaking is the simple yet powerful idea of "investing in people." This framing treats human capital not merely as a social consideration, but as a fundamental input for sustainable, innovation-driven growth.

The emphasis on "combining investment in physical assets and human capital," as reiterated in key policy documents such as the recommendations for formulating the 15th Five-Year Plan, reflects an understanding that long-term competitiveness requires nurturing talent alongside building infrastructure.

"'Investing in people' is crucial for addressing broad systemic challenges," said Zhang Jun of China Galaxy Securities. It represents, in his view, a strategy to simultaneously enhance public welfare and economic dynamism.

This principle is beginning to inform specific policies. Deloitte noted in a research report that recent high-level discussions have identified increasing household incomes as the most effective lever to boost consumption -- a subtle shift from earlier approaches designed at subsidizing purchases.

Zhou Chen, an official with the NDRC, said that authorities are formulating plans for stabilizing and expanding employment while enhancing job quality, as well as an initiative to raise the incomes of urban and rural residents.

Noting that "investment serves as both immediate demand and future supply," Zhou said that the country will work to enhance the returns on investment, which can also directly translate into higher income for workers.

The nation's demographic profile is also being reinterpreted as an asset. With the world's largest annual output of science, technology, engineering, and mathematics (STEM) graduates, this vast reservoir of talent is increasingly viewed as the driving force behind high-quality, innovation-driven growth.

"China's advantage is evolving from a 'population dividend' to a 'talent dividend'," noted Su Jian, director of China Center for Economic Research at Peking University.

As China navigates the complexities of 2026, its focus on intrinsic stability through rebalancing may prove to be the defining feature of the country's next phase of development, and a measured response to the complex challenges ahead. ■