This year marks the beginning of China's 15th Five-Year Plan period. Standing at this new historical starting point, understanding the trends of China's economic development is crucial. What is the current momentum of China's economic growth? What is the potential for future economic growth? What are the new ideas for boosting consumption? In this edition of "Dialogue with Economists," Lu Ming, a distinguished professor at the Antai College of Economics and Management, Shanghai Jiao Tong University, and Executive Dean of the China Development Institute, is invited to provide an in-depth analysis of these hot topics.
Objectively Assessing China's Economic Development Situation Reporter: What is the overall operational status of China's economy currently? What are the new highlights? Lu Ming: Since the beginning of this year, China's economy has achieved a good start, laying a solid foundation for successfully completing the main economic and social development targets for the year and smoothly embarking on the new journey of the 15th Five-Year Plan. In the first quarter, gross domestic product (GDP) grew by 5.0% year-on-year, with multiple economic indicators exceeding expectations. Foreign trade performance was particularly outstanding, with the total value of goods imports and exports reaching 11.84 trillion yuan, a year-on-year increase of 15%. Industrial production grew rapidly, with value-added of industrial enterprises above designated size increasing by 6.1% year-on-year, and over 80% of the 41 major industrial sectors achieving growth. The service sector maintained a stable and positive development trend, contributing 63.2% to economic growth and becoming a key engine driving economic expansion. Price levels rose moderately, with the national consumer price index (CPI) increasing by 0.9% year-on-year, and prices for certain categories showing significant gains. Latest data show that from January to April this year, the national economy maintained a stable and progressive development trend: value-added of industrial enterprises above designated size increased by 5.6% year-on-year; the national service sector production index grew by 4.9% year-on-year; total retail sales of consumer goods reached 16.4941 trillion yuan, up 1.9% year-on-year; total goods imports and exports amounted to 16.2252 trillion yuan, an increase of 14.9% year-on-year; and the national CPI rose by 0.9% year-on-year.
New drivers of economic growth are continuously strengthening. On one hand, the leading and supporting role of high-tech industries is becoming more prominent. In foreign trade, emerging industries such as new energy vehicles and lithium-ion batteries have sustained rapid growth, demonstrating strong resilience and vitality. In industrial production, high-end equipment manufacturing is developing robustly, the pace of manufacturing transformation and upgrading is accelerating, and the role of technological innovation in driving economic growth continues to strengthen. On the other hand, the service sector's role in driving national economic growth is becoming increasingly significant. As China's economic development level continues to rise, the growth rate of service consumption is faster than that of goods consumption, which aligns with the laws of economic development.
While China's economy continues to be stable and positive, it is also necessary to face various risks and challenges squarely. From the external environment, the international political and economic situation remains highly uncertain, which may bring external shocks to economic growth. From the internal environment, the contradiction of strong supply and weak demand remains prominent, and the domestic economic operation faces some difficulties and challenges.
Reporter: China's economic growth target for 2026 is set at 4.5% to 5%. Some views suggest that China's economic growth has entered the "4% era." What is your perspective on this? Lu Ming: I do not believe that China's economic growth rate has entered the "4% era" from now on. Setting the economic growth target within a range is to leave sufficient room to cope with various challenges that may arise internationally and domestically. If the international economic development environment improves overall in the later stages, domestic economic restructuring progresses smoothly, and relevant institutional reform measures are effectively implemented, China's economic growth rate this year could reach or even slightly exceed 5%. Benefiting from the continuous optimization and adjustment of the economic structure in recent years, China's economic scale has steadily climbed, using its own development certainty to cope with the uncertainty of the external environment. To ensure the smooth achievement of the annual economic growth target, continuous efforts are needed in areas such as technological innovation, structural optimization, and consumption upgrading to cultivate and strengthen new drivers of development. At the same time, by strengthening the coordination of macroeconomic policies, a more favorable macroeconomic environment should be created to promote sustained and stable economic growth, especially the steady recovery of investment.
Reporter: Some Western media hype the so-called "China economic slowdown theory." How do you view this narrative? Lu Ming: The so-called "China economic slowdown theory" is fundamentally untenable, failing to grasp the overall picture of China's economic development comprehensively and ignoring the inherent momentum and enormous potential of China's economic growth. In recent years, the endogenous growth momentum of China's economy has been continuously strengthening. On one hand, high-tech industries represented by artificial intelligence are developing rapidly, injecting strong momentum into industrial transformation and upgrading and promoting China's overtaking in related fields. On the other hand, economic structural adjustment and market-oriented reforms are advancing in depth, the reform of factor market allocation is deepening continuously, the construction of a national unified market is accelerating, promoting the optimal allocation of production factors across regions and industries, and significantly improving factor utilization efficiency. By optimizing increments and revitalizing stock, the potential of China's economic development will be further stimulated.
Although China's development level still lags behind some developed economies, it has great potential and broad space for development. We should not only learn from the advanced experience of developed countries but also base ourselves on our own reality, use technological innovation as the guide, structural adjustment as the focus, and deepening reform as the driving force to promote higher-quality and more sustainable economic development. In response to foreign media's repeated erroneous narratives, the academic community should conduct in-depth research based on the actual situation of China's economic development, comprehensively and objectively explain the challenges and strong endogenous momentum of China's economy in international exchanges, and enhance the international community's rational understanding of China's economy.
Fully Unleashing Economic Growth Potential Reporter: Based on your research, what important changes will occur in China's economic development during the 15th Five-Year Plan period? How can economic growth potential be unleashed? Lu Ming: China's economic development will present new trends, with important changes observable from four aspects. First, new technologies represented by artificial intelligence will activate new momentum. In recent years, China's artificial intelligence has developed rapidly, becoming an important driving force for industrial upgrading and economic growth. During the 15th Five-Year Plan period, artificial intelligence will deeply empower China's economic development, and its importance will far exceed that of the 14th Five-Year Plan period. Second, the driving role of consumption on the entire economy will continue to manifest, especially service consumption becoming a key focus for driving growth. During the 15th Five-Year Plan period, exports will still be an important support for China's economy, while expanding domestic demand has become a strategic basis for promoting economic restructuring and achieving high-quality development. New momentum for domestic consumption mainly relies on the development of the service sector. The National Service Industry Conference held in April this year clarified the important role of the service sector in boosting consumption, optimizing structure, improving people's livelihoods, and expanding employment, which is conducive to building consensus across society and creating a favorable environment for the healthy development of the service industry. Third, challenges from demographic changes bring new issues. During the 15th Five-Year Plan period, population aging and declining birth rates will deepen, and the demographic dividend in terms of quantity will tend to decline, requiring comprehensive measures to release the quality dividend of human capital. For example, improving the fertility support policy system and accelerating the construction of a fertility-friendly society; increasing investment in public services such as education and healthcare to strengthen human capital investment; optimizing the efficiency of human resource allocation, accelerating the process of new urbanization, promoting orderly and reasonable population mobility, and facilitating precise labor transfer. Fourth, the international political and economic environment is undergoing profound and complex changes. The world today is undergoing profound changes unseen in a century. In recent years, international turbulence has intensified, with frequent local conflicts disturbing global industrial and supply chains and impacting global economic development. China actively participates in global economic governance, unswervingly promotes high-level opening-up, continuously relaxes market access in the service sector, shortens the negative list for foreign investment access, and has introduced a series of opening-up measures in fields such as telecommunications, education, and healthcare. The Hainan Free Trade Port has achieved island-wide customs closure operations, which is expected to form a batch of replicable and promotable open innovation experiences that will gradually be promoted nationwide. These measures inject new momentum into China's high-quality economic development.
Reporter: How will the transformation of economic drivers affect people's employment and income? Lu Ming: I believe that the impact of economic growth on residents' employment and income mainly depends on two factors: speed and structure. Sustained economic growth is a prerequisite for the steady increase in residents' income. If China's economy maintains an average annual growth rate of around 5%, the target of creating over 12 million new urban jobs is guaranteed. From a structural perspective, capital-intensive industries play a prominent role in driving economic growth, but their ability to drive employment and residents' income is relatively limited; labor-intensive industries are more likely to achieve synchronous improvement in economic growth, employment, and income growth. Currently, against the backdrop of a continuous decline in employment scale in the primary and secondary industries, the service sector has become an important support for absorbing employment and increasing residents' income in China, and it is also the main area for promoting employment of agricultural transfer populations. The service sector has significant labor-intensive characteristics. Accelerating the development of the service sector, especially consumer services, can effectively increase the proportion of labor remuneration, laying an income foundation for expanding domestic demand and boosting consumption. At the same time, multiple measures are needed to address the impact of economic structural adjustment on employment. Strengthen re-employment skills training, actively develop new job positions, and improve the social security system. Focus on expanding the coverage of social security and social welfare, gradually extending security policies such as minimum living security, low-rent housing, and public rental housing to migrant populations with local employment experience and social security payment records, allowing them to equally enjoy urban public services. Further improve the unemployment insurance system and raise the standard of unemployment insurance benefits.
Reporter: With the rapid development of artificial intelligence technology, many people worry that their jobs will be replaced. What impact do you think the development of artificial intelligence will have on employment? How should we respond? Lu Ming: Looking at human history, we have experienced multiple rounds of major technological revolutions over the past 100-plus years. Each time a new technology emerged, it triggered anxiety about unemployment, but there has never been a situation where major technological progress led to a long-term increase in unemployment rates. Locally, artificial intelligence does have an impact on employment, especially for standardized repetitive work that is more easily replaced by artificial intelligence. However, from current macro data, no significant impact of artificial intelligence on overall employment has been found. For individuals, two things should be done: first, actively cultivate skills that cannot be replaced by artificial intelligence, especially comprehension, communication, expression, and aesthetic abilities. These skills are complementary to artificial intelligence and help achieve human-machine collaboration. Second, for practitioners in industries with overcapacity, they should prepare for transformation as early as possible. Do not expect to work in one company or one industry for a lifetime; this idea is no longer realistic in the current context.
Making the Consumption Engine More Powerful Reporter: What is the development trend of consumption in China during the 15th Five-Year Plan period? What are the consumption barriers that urgently need to be broken? Lu Ming: Looking ahead to the consumption development trend during the 15th Five-Year Plan period, it can be grasped from two dimensions: total volume and structure. In terms of total volume, as the economy continues to develop and residents' income steadily increases, consumption scale will achieve synchronous growth. In terms of structure, industrial goods consumption will gradually slow down, and the driving role of service consumption on consumption growth is becoming increasingly prominent. Currently, there are still some shortcomings on the supply side of service consumption in China. Supply in areas such as education, healthcare, elderly care, and childcare is still insufficient, and the quality of supply cannot fully meet the needs of the people. The convenience and adaptability of consumption scenarios are insufficient, with a relative shortage of supply for elderly-friendly consumption, and insufficient supply of new consumption scenarios such as cultural entertainment and sports leisure for young people, with room for improvement in the experience. For example, some large commercial complexes are highly homogenized, with shortcomings in terms of business diversity, facility experience, and refined services such as elderly-friendliness, child-friendliness, and pet-friendliness, which inhibit the vitality of offline service consumption. To further release consumption potential and strengthen service consumption, continuous efforts are needed on the supply side, increasing the supply of service facilities, relaxing unreasonable industry regulations, complying with the trend of residents' service consumption upgrading, and promoting the improvement and expansion of service consumption.
Reporter: Income growth is the source of confidence for boosting consumption. This year's "Government Work Report" clearly states "formulating and implementing an urban and rural residents' income increase plan." In your opinion, what aspects should be focused on to promote residents' income increase? Lu Ming: This year's "Government Work Report" emphasizes that "the growth of residents' income should be synchronized with economic growth." This means that the growth of residents' income should not be slower than GDP growth. To achieve this goal, two main approaches are needed. First, vigorously develop the service sector. The service sector is a typical labor-intensive industry, and its role in creating employment and increasing residents' income is stronger than that of manufacturing. In 2025, the added value of China's service sector accounted for 57.7% of GDP, and this proportion will further increase in the future. Second, improve the social security system. A sound social security system can enhance welfare security levels and income expectations. At the same time, it is necessary to improve the labor rights protection system, urge employers to strictly implement labor laws, improve the reasonable wage growth mechanism, and effectively protect the legitimate rights and interests of workers.
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