By Abdul Ghani

China’s 15th Five-Year Plan (2026–2030), which signals a shift from investment- and export-led growth to a more consumption-driven economic model, is highlighting a pathway for Pakistan to strengthen its domestic economy and improve long-term stability. The new plan places strong emphasis on boosting household incomes, expanding domestic demand and advancing innovation-led growth, reflecting Beijing’s strategy to build a more resilient and sustainable economy amid global uncertainties and weakening external demand.

Analysts say Pakistan, which has traditionally relied on external financing, remittances and export-led strategies, can draw important lessons from China’s evolving economic framework. Dr Ikhtyar Baig, Member of the National Assembly and also member of the Standing Committee on Commerce, told Wealth Pakistan that China’s shift underscores the importance of strengthening internal markets. “Pakistan must recognize that long-term economic stability cannot rely solely on exports and foreign inflows.

Expanding the domestic consumer base through income growth, industrial diversification and SME development is essential,” he said. He noted that policies aimed at enhancing purchasing power, supporting local industries and improving ease of doing business would be critical to replicating elements of China’s success. “A strong domestic market not only stabilizes growth but also attracts foreign investment by offering scale and demand,” he added.

China’s plan also prioritises technological innovation and high-value manufacturing, areas where Pakistan still faces structural gaps. Experts say aligning industrial policy with domestic demand can help Pakistan move up the value chain. Dr Khalid Mahmood, Development Economist at the Pakistan Institute of Development Economics (PIDE), said Pakistan needs structural reforms to support a transition toward a consumption-driven model. “China’s strategy is built on productivity gains, urbanization and rising incomes.

For Pakistan, this means investing in human capital, improving labour productivity and formalising the economy,” he said. He added that without addressing income inequality and weak wage growth, domestic consumption would remain constrained. “Fiscal discipline, targeted subsidies and social protection programmes can help stimulate demand while maintaining macroeconomic stability,” he said.

Another key element of China’s plan is the expansion of the digital economy and services sector, which are expected to play a larger role in future growth. This presents an opportunity for Pakistan to leverage its growing IT and services sectors. Dr Zafar Nawaz Jaspal, Dean of Social Sciences at Quaid-i-Azam University, Islamabad, highlighted the broader socio-economic implications of the shift. “China’s move toward consumption-led growth reflects a maturing economy aiming for more inclusive development.

Pakistan must also prioritise social development indicators such as education, healthcare and employment to sustain internal demand,” he said. He stressed that policy consistency and institutional strength are critical. “Without governance reforms and policy continuity, it will be difficult for Pakistan to build the confidence needed to stimulate consumption,” he added. Experts note that China’s transition does not replace exports but balances them with stronger domestic demand.

For Pakistan, this points to the need for a hybrid strategy that supports exports while also nurturing local consumption. Pakistan’s recent macroeconomic improvements, including easing inflation, a better current account position and rising exports, provide an opportunity to recalibrate economic priorities.

However, economists caution that shifting toward a consumption-driven model requires sustained reforms, including tax base expansion, financial inclusion and industrial modernisation. As China advances to the next phase of its economic transformation, experts say Pakistan can benefit by strengthening domestic demand, investing in human capital and ensuring policy continuity to build a more balanced and resilient economy.

Credit: INP-WealthPk