China’s leadership is signaling a two-track approach for 2026. Maintain export strength, but lean harder into domestic demand to make trade “sustainable.” Reuters reported a senior official, Han Wenxiu, said China will “expand exports while also increasing imports,” alongside measures to boost household income, raise basic pensions, and remove “unreasonable” consumption restrictions (expand exports, imports).
That messaging matters because China’s trillion-dollar trade surplus has become a flashpoint with major partners. The IMF is publicly urging Beijing to curb reliance on exports and stoke consumer demand. The political subtext is clear: if China does not adjust, trade tensions are likely to intensify as partners respond with barriers and investigations (trillion-dollar surplus).
Beijing is also trying to stamp out deflationary price wars, sometimes described domestically as “involution,” where firms compete in ways that destroy profits and reinforce weak pricing power. That connects directly to why policymakers want more consumption: without a stronger household sector, supply-heavy growth keeps pushing prices and margins down, which eventually feeds back into hiring and investment decisions (rein in price wars).
At the same time, official coverage of the Central Economic Work Conference emphasizes that 2026 kicks off the 15th Five-Year Plan and frames domestic demand as a buffer against “external uncertainties.” It also highlights that final consumption contributed 53.5% of growth in the first three quarters of 2025, a statistic designed to show momentum behind the pivot (53.5% of growth).
For global investors and operators, the near-term read is not “exports are over,” it’s “policy is trying to reduce vulnerability.” Watch for follow-through in pension outlays, consumption deregulation, and any concrete steps to cool destructive competition in key industries.
