China focuses on domestic strength for long-term resilience

Editor's note: Matteo Giovannini, a special commentator on current affairs for CGTN, is a finance professional at the Industrial and Commercial Bank of China, a non-resident associate fellow at the Center for China and Globalization, and a member of the Global Young Leaders Dialogue. The article reflects the author's views and not necessarily those of CGTN.

A pivotal executive meeting convened by China's State Council on May 15 has reaffirmed Beijing's commitment to bolster its domestic economy amid a turbulent global environment. At a time of geopolitical tensions, fragile global supply chains and macroeconomic headwinds, China is reinforcing its strategy to seek stability from within.

The message is clear: The domestic economy is not just one part of China's development strategy but its foundation. In today's unpredictable global landscape, making full use of the country's vast scale, structural resilience and transformative potential has never been more important. The strength and vitality of China's internal market now stand as its most reliable buffer against external shocks.

A key takeaway from the meeting is the centrality of domestic demand as a strategic driver of economic momentum. Recent data show that while exports continue to contribute to growth, the real engine lies at home. Consumption, for instance, now accounts for over 60 percent of GDP growth. The renewed emphasis on fostering demand, through income growth, employment stabilization and expanded access to quality public services, signals a strategic shift away from short-term stimulus toward a more sustainable, consumption-driven growth model.

Several targeted measures have been outlined to stimulate key areas of domestic demand. These include supporting large-scale equipment upgrades and consumer goods trade-ins, improving housing conditions through urban renewal, and increasing support for industries that align with China's green and digital transformation agendas. These initiatives are designed to boost short-term economic activity and lay the foundation for long-term productivity and structural upgrading.

Confidence, too, plays a vital role in sustaining domestic growth. The meeting emphasized the need for coordinated macroeconomic policy across fiscal, monetary and industrial domains to reinforce market expectations and provide a stable environment for investment and consumption. In an era where sentiment can significantly shape economic outcomes, consistent and transparent policy signals are critical.

China's coordinated macro-policy stance has already shown results. In the first quarter of 2025, GDP growth exceeded expectations, with key indicators pointing to a broad-based recovery. However, policymakers remain keenly aware that sustaining this trajectory will require a delicate balance between managing financial risks and preserving the flexibility needed for continued market vitality.

To this end, the State Council reaffirmed its commitment to strong and proactive policy support. This includes the continued implementation of pro-growth fiscal measures, such as front-loading government bond issuance and the use of targeted monetary tools to ensure sufficient liquidity without encouraging speculative bubbles. The overall tone is one of pragmatic, forward-looking stewardship as China is pursuing not short-lived rebounds but steady, high-quality growth over time.

Beyond cyclical management, the State Council meeting placed strong emphasis on accelerating structural reforms. High-quality development, which is China's defining objective for the new era, goes beyond meeting headline economic targets. It means upgrading industrial capabilities, advancing technological innovation, ensuring environmental sustainability and promoting social inclusiveness.

The meeting's focus on modernizing China's industrial system, particularly through support for emerging industries in high-end manufacturing, green energy and digital technology, reflects a long-term strategy for competitive resilience. By investing in sectors that strengthen both domestic foundations and global positioning, China is preparing to lead the next wave of industrial transformation.

One notable initiative is the advancement of "new productive forces," a term signaling China's intent to leap into future-facing industries aligned with strategic national priorities. Whether through breakthroughs in artificial intelligence, semiconductor development, or renewable energy technologies, these sectors form the backbone of a future economy designed to thrive regardless of external disruptions.

Another important aspect of the economic policy event was its renewed focus on urbanization and coordinated regional development. Policies aimed at integrating rural populations into urban centers, renovating urban villages and upgrading infrastructure reflect a holistic approach to inclusive growth. These initiatives aim not only to expand economic participation but also to unlock new sources of domestic demand and innovation.

Urbanization is much more than a demographic trend. It is a powerful growth engine that enhances resource allocation, drives service-sector expansion and fosters technological diffusion. By tightly linking urban development with economic planning, China is working to ensure that growth is balanced across regions, helping to mitigate inequalities while activating new growth poles in the central and western parts of the country.

All things considered, the May 15 meeting is a strong testament to China's belief in the strategic value of its domestic economy. It is both a shield that protects against external volatility and a spear that drives forward the nation's long-term rejuvenation.

As the international environment grows more complex, China's dual emphasis on internal stability and high-quality development offers a roadmap for navigating uncertainty. Rather than retreating from globalization, China is building a more self-reliant and resilient growth model from within, anchored by domestic confidence, industrial modernization and structural reform.

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