What are experts saying about the outlook for China and emerging-market internet and consumption in 2026 and beyond?

The consensus outlook for China's economy in 2026 is one of continuity, characterized by a fundamental disconnect between rhetoric and policy regarding domestic consumption [2, 18]. While leadership, including Xi Jinping, has elevated "expanding domestic demand" to a strategic, long-term priority, concrete policy actions remain firmly anchored in a supply-side strategy of industrial and technological upgrading [5, 8, 9, 12, 14]. Analysts do not expect a large-scale consumer stimulus package; instead, fiscal support is projected to decline significantly to around **one percent of GDP** [13, 16]. This policy inertia suggests the economy will continue to muddle through with persistent deflationary pressures, a weak property sector that has become a structural drag on household wealth, and a struggling job market [2, 15, 17]. Some analysts note that regulators are working to remove constraints on consumption, but this appears to be at odds with the broader capital allocation which heavily favors industry [10, 5].

This policy focus on industrial investment has created a structural flaw that actively suppresses household income and consumption growth. Despite a six-fold surge in bank loans to the industrial sector since 2019, this manufacturing and high-tech boom has failed to create **any net new jobs in over a decade** . All employment growth has been concentrated in the highly regulated service sector, where innovation is often constrained [2, 6]. This "jobless industrial growth" traps the economy in a cycle of weak domestic demand, forcing a continued reliance on exports . The resulting massive industrial overcapacity and intense domestic price competition, or "involution," are increasingly being exported globally, creating significant risks of trade friction and protectionist responses from other countries, including those in the Global South [2, 19, 28].

In line with the state's industrial priorities, China's major internet companies are re-architecting their business models away from consumer-facing platforms. Firms like Alibaba and ByteDance are now focusing on AI and cloud infrastructure, explicitly moving away from social media and consumer finance [11, 21]. This strategic pivot aligns with the global "race" in AI capital expenditures and a broader tech trend where the primary design paradigm is shifting from optimizing for human users to optimizing for AI agents [7, 26]. While Chinese consumers are noted to be aggressive early adopters of AI features on smartphones , the corporate focus has clearly shifted from the consumer internet to enterprise and industrial technology. This contrasts with a more constructive outlook for other emerging markets, where countries like Korea, India, and Brazil are monitored for potential outperformance in consumption and other sectors .