FANG Yi: “Investing in People” Reshapes the Logic of Economic Growth

The 2025 Government Work Report designates “boosting consumption” as the core task of economic policy and introduces the Special Initiatives to Boost Consumption, marking a strategic shift in China’s growth model from investment-driven to consumption-driven. This initiative aims to address issues such as weak household purchasing power leading to overcapacity, and diminishing returns from government investment. By “investing in people,” the policy seeks to enhance the efficiency of consumer spending, align consumption with industrial upgrading, unlock the potential of domestic demand, and provide momentum for the development of new quality productive forces, thereby advancing China’s economic transformation toward greater efficiency and sustainability. 

The initiative focuses on the core issue of insufficient disposable income among residents, prioritizing income growth. It addresses structural imbalances through three approaches: accelerating payment to small and medium-sized enterprises (SMEs), providing targeted support to vulnerable groups, and combining short-term relief with long-term strategies. The plan establishes a comprehensive “income growth–social security–consumption upgrading” framework. Measures include childcare subsidies and reduced education and healthcare costs to ease household debt burdens. At the same time, it explores new areas of consumption in big-ticket items and emerging markets, promoting the deep integration of technological innovation and market development.

(The above is a translated summary of views expressed by Professor FANG Yi from the National Academy of Development and Strategy at Renmin University of China in an interview with People's Daily Online.)

Original article link: http://finance.people.com.cn/n1/2025/0321/c1004-40443585.html

Translator: ZHANG Yuqing

Editor: LIU Qi