China will allocate more of its fiscal spending this year towards human capital and social safety nets, as Beijing seeks to boost domestic demand and unlock new growth through “investing in people”.
“Efforts must be sustained to optimise the expenditure structure, with greater emphasis on supporting the boosting of consumption, investing in people, and safeguarding people’s livelihoods,” Premier Li Qiang said in his annual work report, delivered during the opening session of the National People’s Congress on Thursday.
Incorporated into China’s 15th five-year plan, the “investing in people” concept reflects Beijing’s shift in approach as it places greater reliance on the domestic market for future expansion amid global uncertainties, after decades of export-led growth and heavy investment in physical assets. This marks the first time the slogan has appeared in such a strategic policy blueprint.
Unlike Western strategies that prioritise tax cuts for the wealthy to drive growth, China is emphasising the need to improve public well-being, with specific targets now enshrined in policy road maps.
In his report, the premier vowed to increase inputs in areas closely related to human development. These include formulating and implementing plans to boost residents’ incomes; rolling out more supportive and friendly policies for childbearing; expanding support for senior care; and launching large-scale vocational skills training programmes.
Beijing has set seven livelihood-related goals among its 20 numerical targets for the five years, according to the full text of the 15th five-year plan released the same day. The plan guides China’s policy priorities from 2026 to 2030.
These include raising the average duration of education for the working-age population to 11.7 years by 2030, boosting the proportion of nursing beds in senior care institutions to 73 per cent, and increasing the number of doctors per 1,000 people to 3.7.
Such investments are part of the government’s efforts to “enhance the internal impetus and reliability of the domestic economic cycle”, according to a budget report delivered on Thursday by the Ministry of Finance.
“Investing in people” is key to fostering positive expectations for China’s 2026 to 2030 planning period, according to prominent economist Cai Fang, an academician at the Chinese Academy of Social Sciences.
“Economic research has found that investment in physical capital yields diminishing returns, whereas investment in people yields increasing returns, which explains why we have seen rapid growth in investment in people in recent years ... this is a practical necessity,” he said at a book launch on Tuesday.
While policymakers hope to unleash greater spending power through improved incomes, public services and safety nets, the fiscal resources announced so far appear modest.
Only 250 billion yuan (US$36.3 billion) will be allocated to the consumer goods trade-in scheme, down from 300 billion yuan last year. A new 100 billion yuan fund will provide interest rate subsidies for consumers and services firms, according to Li’s report.
“But the lack of a more substantial ramp-up in fiscal support for consumption is disappointing,” said Julian Evans-Pritchard, China economist at Capital Economics, in a note on Thursday. -- SOUTH CHINA MORNING POST
