China's President Xi Jinping is set to unveil the 15th Five-Year Plan with a historic push to boost domestic consumption, aiming to raise its share of GDP from 41% to 46% by 2030. This shift comes amid challenges like a property slump and US protectionism, forcing a move away from China's traditional investment-heavy growth model. The plan's focus on services like healthcare and tourism reflects recognition that higher consumption is critical for sustainable expansion as the middle class swells to 800 million people. Bloomberg Economics forecasts consumption growth to 46% of GDP by 2030, though structural barriers remain.

Structural hurdles complicate the transition. Households save 31% of disposable income due to inadequate social safety nets, with government social spending at just 13.5% of GDP versus OECD averages. 165 trillion yuan in household deposits sits idle, mostly in low-yield accounts. Officials acknowledge the need for bold policies, including childcare subsidies and anti-involution measures, but service sector growth faces restrictions in healthcare and education, limiting progress beyond discretionary spending like tourism.

The economic implications are profound. A successful pivot could unlock China's massive market for global businesses, though Morgan Stanley's Xing warns it won't be easy. China's manufacturing dominance complicates rebalancing, as Xi aims to maintain industrial strength while boosting services. The IMF urges a consumption-led model, but old habits die hard in a geopolitical climate prioritizing security over growth. Success hinges on overcoming precautionary savings and structural reforms to truly shift the economy's foundation.