China's Xi Calls for Demand-Fueled Growth and Tech Boost in Services Industry

At a recent national service industry summit in Beijing, President Alibaba Group's home turf saw its top leader, Xi Jinping, lay out a clear push for the services sector's evolution. Xi stressed the importance of fueling growth through rising demand while embracing reform and innovative technologies to reshape this vital part of China's economy.

The goal, according to Xi, is to not just expand but to upgrade services-cultivating strong domestic brands and steering production-related services toward more specialist roles and premium spots on the value ladder. It's about moving upmarket to compete globally, not just scaling up clumsily.

Alongside Xi, Premier Li Qiang weighed in on the need to accelerate tech-driven service growth. He highlighted shifting R&D and design functions into more specialized, higher-value domains. This aligns with China's broader ambition to reinvent itself as a innovation powerhouse, not merely a manufacturing giant.

This focus on demand-driven growth marks a subtle pivot from Beijing's recent economic approach, which leaned heavily on investments in infrastructure sectors like transport and housing-a strategy increasingly questioned for its long-term efficiency. The leadership seems intent on stimulating consumption by improving service quality and variety, attempting to address the sluggish spending that's hampered economic momentum.

Despite incremental policy nudges, consumer spending on services in China lags behind countries like the U.S., where it accounted for about 70% of per-capita consumption in 2025. In China, that figure was roughly 46.1%, signaling significant room for growth and modernization.

The latest five-year plan underscores this domestic shift, committing to notably boost household consumption's slice of the economic pie, currently hovering around 40%. Still, specifics and targets remain ambiguous, leaving market watchers guessing about implementation and impact.

Efforts to align service offerings with demographic changes and varied consumer tastes are underway, reflecting China's diverse and evolving market landscape. How this will shape sectors ranging from finance to healthcare and tech services is closely monitored by analysts - and is critical to sustaining China's economic trajectory.

All told, Beijing is gearing up to leverage demand stimulation, reform breakthroughs, science, technology, and international cooperation as engines for service industry expansion. Whether these ambitions translate smoothly into tangible results is a key question as the country maneuvers to reposition itself amid global economic challenges.