Editor's note: Li Lun, a special commentator for CGTN, is an assistant professor of economics at Peking University. The article reflects the author's opinions and not necessarily the views of CGTN.

China's household incomes continued to rise in the first nine months of 2026, providing a stronger foundation for domestic demand. Data released by the National Bureau of Statistics (NBS) on October 19 show that per capita disposable income grew 5.3% and per capita consumption expenditure increased 3.6%, both in nominal, year-on-year terms. The Chinese government's task is to make those income gains dependable enough for households to commit more of their earnings to consumption.

The income growth plan proposed in the 2026 Government Work Report addresses this task by linking income enhancement with stronger household security. The plan calls for measures including increasing low-income households' earnings, expanding property-based income, and refining systems for remuneration and social insurance. For households with tight budgets, additional earnings provide a direct route into demand, helping them pay for goods and services they have had to postpone. 

China is employing a more proactive fiscal policy to advance that agenda. The government work report proposes that general public budget expenditure for this year will reach 30 trillion Chinese yuan ($4.5 trillion) – an increase of approximately $189.8 billion over the 2025 figure – with a greater focus on consumption, investment in human capital, and public well-being. The 15th Five-Year Plan extends this direction by linking investment in physical assets with investment in people. Together, these commitments connect the income plan to decisions about where public money goes: toward activity that sustains employment and services that reduce the burden on household budgets.

Public investment supports the income plan through the employment it creates and sustains. Wages accounted for 57.4% of disposable household income in the first nine months, according to the NBS, making employment a substantial channel for strengthening purchasing power. China's work-relief programs illustrate the immediate effect: Local residents earn wages and receive skills training through infrastructure projects. As these workers spend part of their earnings, shops and service providers benefit in turn. Sustaining those gains after construction depends on what the completed infrastructure enables. Better transportation, for example, can expand the market reach of businesses, thereby helping them sustain the employment from which families earn a livelihood. 

Stronger social insurance helps households plan for healthcare costs and living expenses in retirement. More dependable provision gives families greater confidence about how much of their current income they can spend while preparing for old age. The government work report supports this objective by pledging to increase the annual per capita subsidy for resident medical insurance.

Public funding helps finance protection against costs that households would otherwise bear more heavily. Insurance pools those risks, allowing families to plan around a more predictable share of medical costs. Its effect on spending will depend on whether households believe that coverage will remain available when they need it. Reliable coverage can reduce precautionary saving, allowing a larger share of rising incomes to support current consumption.

Care services show how these two uses of public money reinforce each other. Building a community care facility generates orders and construction jobs, while funding its operation supports continuing employment. Affordable care can also enable family members who provide unpaid care to take paid work. Public provision therefore strengthens earnings while easing an essential expense. Its value to household confidence depends on reliable services over the longer term, which requires operating funds as well as buildings.

The spending effect can therefore extend beyond the care sector. When reliable provision makes essential costs easier to plan for, families can devote more of their rising income to travel, dining and cultural activities. The latest NBS figures indicate the potential: service retail sales increased 5% in the first nine months, which was four percentage points faster than retail sales of goods. Many such services depend on local workers and facilities, giving additional spending a route into employment in the communities where it occurs.

For service businesses, more dependable demand provides a basis for employing staff and expanding operations. Hiring and expansion involve ongoing costs, so businesses need confidence that customer demand will remain steady. When household spending supports continuing employment, the benefits of the initial fiscal expenditure reach another set of wage earners. Their incomes, in turn, support demand elsewhere. This is how public support for household finances can encourage private activity that extends the effects of government spending.

The income growth plan thus connects two foundations of a stronger consumer market: The capacity to earn and the confidence to spend. The latest release shows the income base on which that strategy can build. Directing public resources toward productive employment and dependable services will help China turn rising household incomes into a more durable source of demand, with expanding service businesses creating further opportunities for people to earn.

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com. Follow @thouse_opinions on X to discover the latest commentaries in the CGTN Opinion Section.)