China defends growth model, says domestic consumption is driving the economy

DURBAN, South Africa – China’s trade with the world is within reasonable bounds, and the nation is not out to dominate global markets, a senior official has said, pointing to figures showing that domestic consumption is driving economic growth.

“Most of China’s production is intended to meet domestic demand,” Finance Vice-Minister Liao Min said in an interview on July 18 near Durban, South Africa, where he was attending a

gathering of Group of 20 policymakers

.

“When there’s demand from abroad, China exports accordingly. This does not mean, however, that China is trying to dominate every market,” he said.

Mr Liao also hailed the latest Chinese gross domestic product growth figures as helping to contribute to the world economy at a decisive moment.

Economists have marked down their projections for global growth in 2025 due to the onslaught of tariff increases by US President Donald Trump.

Figures this week showed China’s expansion

at 5.3 per cent for the first half of 2025

, “in line with expectations”, Mr Liao said.

“China’s certainty and stability are the greatest contributions it makes to the world today because what the global economy needs most right now is stability and certainty,” Mr Liao said. “We are steadily advancing towards an economic model driven by consumption, while at the same time maintaining a relatively balanced foreign trade.”

The latest China GDP figures showed exports supported growth in the most recent quarter.

The country logged a goods-trade surplus of about US$586 billion (S$752 billion) in the first half of 2025, due in part to exporters front-loading shipments on tariff fears.

While export momentum is expected to cool in the coming months, some economists still see a record full-year surplus above US$1 trillion.

Mr Liao said that, over the past four years, consumption has driven an average of 56.2 per cent of China’s GDP gains. That was 8.6 percentage points higher than during the 2016-2020 period, he said.

Domestic demand, as a whole, accounted for 86.4 per cent of China’s growth, he said.

He also said China’s current account surplus – the broadest measure of trade, as it includes services and some financial transactions – was about 2.2 per cent in 2024, a level “recognised globally as reasonable” and indicating the share of its shipments worldwide is “not excessively high”.

China’s critics have used other metrics.

A top US Treasury official cited figures in 2024 showing China’s manufacturing-goods trade surplus approaching 2 per cent of world GDP, roughly twice the share of Japan’s in the early 1990s.

Current Treasury Secretary Scott Bessent has repeatedly called China “

the most imbalanced economy

in the history of the world”.

Speaking at a congressional hearing in June, Mr Bessent charged Beijing with “trying to export their way out” of the nation’s domestic real estate slump.

Mr Liao’s comments come ahead of an expected fresh round of trade talks with the United States in the coming weeks. He did not offer any specific comment on Mr Bessent’s criticism.

Mr Liao has been a key member of China’s team of negotiators that reached

a trade war truce

with their American counterparts in Geneva, and again in London, earlier in 2025.

Consumption aid

Mr Liao also said looking at a particular sector can give a flawed perspective of China’s trade.

“Just because China holds a large market share in certain products doesn’t mean it should be accused of overcapacity,” he said. “Such claims are oversimplifications and fail to capture the full reality.”

The huge uncertainty surrounding Mr Trump’s levies on Chinese goods has added urgency in Beijing to shift its growth towards domestic consumption.

The government has doubled the amount of ultra-long special sovereign bond issuance, aimed at subsidising consumer purchases of electronic products, home appliances and cars.

That took the total to 300 billion yuan (S$54 billion). More than half of the allowance was used in the first half of 2025, incentivising sales of about 10 times that amount.

For the longer term, the authorities will seek to expand service industries and promote the green and digital sectors, aiming to propel economic transformation, and beefing up consumer spending power as jobs and incomes rise, Mr Liao said.

Meanwhile, the government will continue to strengthen social safety nets, including pensions, to ensure stable growth in consumer spending over the long run, he said. BLOOMBERG