Former IMF official highlights crucial role of domestic demand for Chinese economy

Alfred Schipke, former International Monetary Fund (IMF)'s senior resident representative for China, has emphasized the critical importance of boosting domestic demand and raising residents' income, saying they are the panacea for Chinese economy.

Schipke's remarks came as China unveiled a new plan to encourage consumption and drive economic growth earlier this month.

The plan is composed of 30 policies across eight sections, the first seven of which outline specific actions for implementation, including demand-side initiatives such as income enhancement for urban and rural residents, and measures to support consumption capacities. On the supply side, actions are aimed at improving the quality of services consumption, upgrading bulk consumption and enhancing consumption quality.

The eighth section emphasizes the need to enhance supportive policies related to investment, finance, credit and statistics.

In a recent interview with the China Global Television Network (CGTN), Schipke spoke highly of the plan, highlighting that it is the first time at the highest level that China has explicitly focused on domestic demand and income enhancement. "I'm very happy that you also mentioned the 30-point action plan because for the first time at the highest level, it is spelled out that we have to have an all-front focus on domestic demand, raising incomes. First of all, it makes you less dependent on exports. Secondly, it helps with the welfare of the society and it helps with the re-balancing of the economy. But from the announcement to implementing it, it is going to take time. Industrial policy is still a key focus -- again, the new technology sectors that those have been identified. But they need to be complimented now with a real big effort to foster domestic consumptions. It is truly the panacea for China," said Schipke.

Meanwhile, consumer sentiment in China has seen a significant rebound compared to last year, the latest quarterly survey by Deutsche Bank AG has shown.

The survey by the German bank, published on Tuesday, revealed that 54 percent of respondents felt financially better off than they did a year ago, up from an average of 44 percent in 2024. The percentage of Chinese consumers expecting their income to rise in the upcoming year increased for the second consecutive quarter, reaching 60 percent, according to the survey. It also found 52 percent of respondents are willing to increase their discretionary spending, the highest share in a year.

Commenting on the bank's report, Schipke underscored the importance of providing consumers and companies with a sense of certainty about the future.

"What consumers or companies are always looking for is certainty about the future. I think if you tell them there's going to be a tough spot along the way, that is okay, as long as you know we're heading toward it. And I think the more one talks about the medium term, where we are heading toward, and then provide support to manage the short term, that should be beneficial for consumption," said Schipke.

Former IMF official highlights crucial role of domestic demand for Chinese economy

The deepening integration of sci-tech innovation and industrial innovation emerged as a key focus for potential cooperation among global business leaders at the China Development Forum 2025 held in Beijing on Sunday and Monday.

Speaking at the forum, Li Lecheng, Party secretary of the Chinese Ministry of Industry and Information Technology, highlighted China's steadfast implementation of the innovation-driven development strategy.

Currently, the number of foreign-invested enterprises established in China has surpassed 1.2 million, with foreign investments spanning 31 major categories and 548 subcategories within the country's manufacturing sector.

"Promoting the deep integration of scientific and technological innovation and industrial innovation is not a solo performance by China, but a chorus by the world. China has a complete industrial system, rich application scenarios, a super-large-scale market and a large number of talents, which provides a broad cooperation space for international industrial scientific and technological innovation," Li said.

Notably, beyond production, establishing research and development centers in China to collaborate with domestic enterprises on tackling key technical challenges has increasingly become a growing trend among foreign investors.

British pharmaceutical giant AstraZeneca signed a landmark agreement on Friday to invest 2.5 billion U.S. dollars in Beijing over the next five years. Under the agreement, AstraZeneca will establish a global strategic research and development center in Beijing, its sixth worldwide and second in China after one in Shanghai. The new center, equipped with an advanced artificial intelligence and data science laboratory, will accelerate early-stage drug research and clinical development.

"The reason we want to invest in China is because of the explosion of innovation that is happening in the country. As we work with those companies, we invest, of course, but we also invest in bringing our own capabilities, our own skills. We are investing in the life science physical ecosystem in Beijing, for instance, where we are actually going to help smaller startup companies come up with new products, training people who will actually be able to create economic growth," said AstraZeneca CEO Pascal Soriot.

The economic transformation led by innovation has also brought new opportunities for foreign-funded enterprises.

"We invest in high quality growth, we invest in innovating, and we invest in cooperating with our good Chinese partners. It's a journey that has just started right now, but it also is an area where we need to work close together," said Kim Fausing, president and CEO of Danfoss, a global market leader in heating and cooling.

China integrating innovation with industrial progress resonates with global business leaders