China's efforts to expand domestic demand this year are expected to strengthen its role as a major engine of global growth, as policies from consumer trade-in programs to income growth initiatives aim to build a more robust consumer market, officials and economists said.

The strategy, outlined in the Government Work Report, sends a clear signal: China is moving from being known primarily as the "world's factory" to becoming an increasingly important global market, with Chinese consumers emerging as a major engine of demand for businesses worldwide, they added.

For the second consecutive year, the Government Work Report has placed "expanding domestic demand" at the top of the national policy agenda, with particular emphasis on "advancing special initiatives to boost consumption" in a more prominent position.

President Xi Jinping said in late December that expanding domestic demand is not a stopgap but a strategic measure bearing on economic stability and security.

Xi has called for accelerating efforts to address weaknesses in domestic demand, especially consumption, to make domestic demand the main driving force and stabilizing anchor for economic growth.

Implementing a strategy of expanding domestic demand is necessary for maintaining the long-term, sustained and healthy development of China's economy and meeting the people's ever-growing demand for a better life, Xi said.

Last year, China's total retail sales of consumer goods surpassed 50 trillion yuan ($7.23 trillion) for the first time, while final consumption expenditure contributed 52 percent to economic growth, data from the National Bureau of Statistics showed.

Rebalancing toward consumption-led growth would not only lift the pace of growth of the world's second-largest economy, but also make it less vulnerable to external uncertainties and more resilient as a substantial contributor to global growth, said Marshall Mills, the International Monetary Fund's senior resident representative in China.

To propel further consumption growth, Chinese policymakers made it clear in the Government Work Report that measures to "stimulate the internal drive for household spending" are at the top of the consumption-boosting policies.

To this end, China will formulate and implement an income growth plan for urban and rural residents and roll out a range of practical measures to boost the earnings of low-income groups, increase property income and refine the social security system.

Michael Jiang, head of clients and markets at KPMG in China, said that the government's efforts to allocate increased policy resources toward improving people's livelihoods in the coming years, while offering limited short-term growth stimulus, are expected to accelerate the formation of a new model driven by domestic demand in the medium and long term.

"The goal is not just to grow this year — it's to build an economy that can grow sustainably. That requires investing in the foundations: healthy, educated, secure people," Jiang said.

In addition to enhancing the capacity and confidence of households to spend, analysts noted that it is important to diversify the offering of goods and services to meet people's evolving preferences.

To promote the expansion and upgrading of goods consumption, about 250 billion yuan in ultra-long special treasury bonds will be earmarked for consumer goods trade-in programs, according to the Government Work Report.

The country will also implement initiatives to upgrade services, develop a number of new, high-profile consumption scenarios with broad appeal, and move faster to nurture new areas of consumption growth.

"The trade-in program will prioritize green and intelligent products this year, while ensuring stronger support for brick-and-mortar retailers," Commerce Minister Wang Wentao said during the two sessions. "This will help create market space for emerging industries."

China will broaden market access for foreign investors in key service sectors and expand pilot programs in value-added telecom services, biotechnology and wholly foreign-owned hospitals, Wang added.

Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating, said that the focus of China's consumption promotion efforts is gradually shifting from durable goods such as automobiles and home appliances toward service consumption including tourism, travel and cultural entertainment.

Data from the National Bureau of Statistics show that per capita service-related consumption expenditure grew at an average annual rate of 8.5 percent between 2020 and 2025.

The structural advantages remain — demographic trends favor services, incomes continue rising and consumer preferences evolve toward experiences — but realizing that potential requires better service capacity, quality and diversity, Wang added.

Chinese households increasingly seek diverse products and services that foreign suppliers are well-positioned to provide, and meanwhile, China has vowed to expand imports, which collectively translate into a significant boon for foreign businesses, according to multinational executives.

In November, China launched the "Big Market for All: Export to China" campaign — a series of events designed from the perspective of its trading partners to expand import channels and promote the entry of more high-quality products and services from around the world into China.

Liliana Lucioni, president for Coach China, said that as one of the world's most important and dynamic consumer markets, China serves as a critical pillar of the global strategy for the US luxury brand.

Phyllis Cheung, CEO of McDonald's China, said that the company will actively participate in energizing offline consumption scenarios, and plans to open more than 1,000 new restaurants this year.

"We are cultivating new development drivers to better meet the evolving needs of Chinese consumers," Cheung added, emphasizing that the expansion would be accompanied by the continuous upgrading of products, services and operational capabilities.