Against a backdrop of surging global protectionism and escalating geopolitical friction, China’s 2026 economic growth target of 4.5 to 5 percent, framed by a deliberate shift toward high-quality development over rapid expansion, is positioning the country as an irreplaceable market, production base and innovation test bed for multinational corporations worldwide, top policymakers and global business leaders have confirmed.
After decades of prioritizing speed above all else, the world’s second-largest economy has transitioned to a new growth model centered on “new quality productive forces”, anchored in rising consumer demand, robust manufacturing foundations and accelerating homegrown innovation. The shift aligns with policy priorities laid out by Premier Li Qiang in mid-March, who outlined targeted, urgent policy measures to deliver on growth goals and advance work across all key economic priority areas.
Expanding domestic demand by stimulating consumer spending has been named the top policy priority for 2026 in China’s Government Work Report, a reorientation designed to insulate the economy from external volatility and build a more sustainable, consumer-led growth trajectory. Han Wenxiu, executive deputy director of the Office of the Central Commission for Financial and Economic Affairs, emphasized at the late-March China Development Forum that steadily lifting consumption’s contribution to GDP is both the most critical priority and the most pressing challenge facing China’s push for coordinated, balanced economic development.
“We must promote the formation of a development model driven more by domestic demand, propelled by consumption, and powered by endogenous growth,” Han said.
Current data underscores the untapped potential of China’s consumer market: household spending accounted for just 39.9 percent of China’s GDP in 2024, 10 to 30 percentage points lower than the average rate seen in major developed economies. “China’s advantages as a super-sized market have not been fully leveraged,” Han noted, adding that enormous room remains for consumption growth, particularly in service sectors. A third-quarter 2025 survey from the People’s Bank of China found that Chinese households rank tourism, education, healthcare and cultural entertainment as the four categories where they most plan to increase spending in the near term, placing goods consumption fifth.
To meet rising consumer expectations and diversify service offerings, China is rolling out pilot opening-up programs for key service sectors, including value-added telecommunications, biotechnology and wholly foreign-owned hospitals. For global enterprises, this opening creates expanded opportunities to connect with Chinese consumers and integrate into the country’s evolving market ecosystem.
Ramon Laguarta, chairman and CEO of global food and beverage giant PepsiCo, noted that China’s 15th Five-Year Plan (2026-2030) places clear focus on expanding high-quality consumption, accelerating innovation and boosting domestic demand — priorities that align perfectly with PepsiCo’s long-term global strategy. Today, PepsiCo operates more than 70 farms, over 50 beverage bottling plants, 10 food manufacturing facilities and a dedicated R&D center in China focused on understanding local consumer preferences.
“Many innovations inspired by traditional Chinese food culture and consumer insights have now successfully entered markets across Asia, and have even reached the United States and Europe,” Laguarta said. “China not only drives our growth — it is shaping our global future. China’s digital ecosystem allows us to test our bold ideas with far greater efficiency than anywhere else — from AI-powered supply chains to e-commerce platforms. We are constantly exploring new ways to serve consumers more effectively.”
PepsiCo is far from an outlier. Senior industry executives across sectors report a growing cohort of multinationals now view China as more than just a large, profitable end market — it has become a critical production base for strengthening global supply chain resilience and a dynamic innovation hub for collaborative product development.
“Whenever I come to China, I am impressed by the dynamism of this market. New technologies move quickly into practical use. Products reach the market fast. And in many industries, development takes place with remarkable speed,” said Stefan Hartung, chairman of the board of management at German industrial multinational Bosch Group.
Commerce Minister Wang Wentao highlighted that China’s economic scale is supported by one of the world’s most comprehensive industrial systems, which includes more than 200 mature industrial clusters spanning sectors from consumer electronics to advanced materials and new energy vehicles. Beyond industrial infrastructure, Wang noted China’s human capital pool is undergoing a transformative shift: the country now boasts the world’s largest community of scientists and engineers, with its full-time equivalent R&D personnel ranking first globally.
This growing innovation capacity has earned global recognition: the 2025 Global Innovation Index released by the World Intellectual Property Organization last September marked the first time China broke into the global top 10 for innovation performance.
Han emphasized that after years of sustained investment, China’s indigenous innovation capacity has passed a critical inflection point, and external pressure cannot reverse its development trajectory. “In areas where gaps remain, we will accelerate efforts to catch up and run alongside,” Han said. “In areas where we have strengths, we will achieve running alongside and ultimately leading — striving to realize higher-level technological self-reliance.”
China’s push to cultivate new quality productive forces represents a fundamental paradigm shift, prioritizing scientific breakthroughs, green transition and digital integration over the traditional factor-driven growth model of the past. At the same time, the country is actively expanding international collaboration in these high-growth fields, targeting foreign investment in advanced manufacturing, modern services, high-tech industries and environmental protection and energy conservation.
Roland Busch, CEO of German industrial conglomerate Siemens, pointed out that while the 15th Five-Year Plan emphasizes independent innovation, it also recognizes the critical role of foreign technology and capital in achieving China’s ambitious development goals. Busch described the new five-year blueprint as an open invitation for foreign companies to deepen their participation in China’s domestic production system, adding that China serves as both a core market and a key source of innovation for Siemens. In late March, the company launched 26 new products developed and manufactured in China for distribution to global markets.
Ola Kaellenius, chairman of the Board of Management of Mercedes-Benz Group, echoed this sentiment, noting that China is an indispensable innovation hub, particularly for electric and intelligent vehicle technology. “We are accelerating the next level of localization in China, tapping even more into the potential of its unique local ecosystem,” he said.
Denis Depoux, global managing director of global management consultancy Roland Berger, compared China’s dynamic, competitive market to a fitness club for foreign investors: “Foreign companies have to be competitive, have to move quickly, and have to bring the most cutting-edge innovations to China,” he explained.
Recent investment data reflects growing multinational confidence in China: the number of newly established foreign-invested enterprises in the first two months of 2026 reached 8,631, marking a 14 percent year-on-year increase, according to Ministry of Commerce data.