Key Points
- China is planning to introduce new measures to boost service consumption.
- The move is part of an effort to shift the economy away from manufacturing and exports.
- The services sector is seen as a key area for future growth, but it is currently underdeveloped.
- The government is planning incentives for elderly care, healthcare, and leisure.
China is planning a major push to encourage its citizens to spend more on services such as elderly care, healthcare, and travel. The move is part of a broader effort to shift the country’s economy away from its traditional reliance on manufacturing and exports and toward a more consumption-driven model.
While China’s factories are still humming, domestic demand for goods has been very weak. Retail sales of goods grew by just 0.9% in December, the slowest pace in years. In contrast, service sales climbed 5.5% in 2025. This has convinced Beijing that the services sector is where the real growth potential lies.
However, there are some major hurdles. The services sector in China is underdeveloped, with chronic shortages in areas like elderly care. There are currently only 30 elderly care beds per 1,000 seniors, far below levels in most developed countries.
To fix this, the government is planning to roll out a series of new incentives, ease market barriers, and invest in high-growth areas. This could include subsidies for seniors, interest relief for nursing homes, and longer paid holidays to encourage people to travel.
But analysts say that these measures won’t be enough on their own. The real key to unlocking the potential of the services sector is to boost household incomes and strengthen the country’s weak social safety net.
Chinese households currently save a lot of their money because they are worried about the costs of healthcare and retirement. If the government can provide a stronger safety net, people will be more willing to spend.
For now, it’s a gradual process. The government is still heavily invested in its manufacturing sector, and it’s not going to make any sudden moves that could disrupt the economy. But the shift toward a more service-oriented economy is clearly underway.
