The core challenge facing China's economy today is to break the structural cycle of "low prices, low profits, and low incomes". The key to resolving this predicament lies in "investing in people" and boosting household consumption, Liu Qiao, professor and dean of Guanghua School of Management, Peking University, said at the 2026 PKU Guanghua Economic Outlook and Policy Analysis Conference After the two sessions on Tuesday in Beijing.

"What truly constrains economic growth are not the things we excel at doing, but those that are essential yet difficult to improve," Liu said. "The former refers to investing in physical assets, while the latter refers to investing in people."

Starting his analysis from China's household consumption rate, Liu pointed out that while the physical consumption volume of Chinese residents has far exceeded the global average, the proportion of consumption in GDP calculated by value remains significantly low.

This is mainly due to the low prices of domestic goods and services and the relatively small share of service consumption, which are, in turn, caused by excessive competition resulting from the massive manufacturing capacity and the continuous compression of profits, thereby limiting the growth of workers' income and consumption capacity.

In the face of this structural contradiction, he believes that the key to China's high-quality development lies in focusing on investment and financing in key industries and critical areas in the context of modernization drive.

Meanwhile, it is essential to closely integrate "investing in physical assets" with "investing in people".

Through a comprehensive set of measures — including optimizing GDP accounting methods, increasing residents' disposable income and property income, promoting the urbanization of rural migrant workers, improving social security and childbirth support systems, accelerating the construction of a unified national market, strongly supporting enterprises to expand overseas, and promoting the transformation of enterprises from scale expansion to innovation-driven development — China can truly enhance residents' consumption capacity and willingness, drive the improvement of total factor productivity and the development of new quality productive forces — ultimately breaking the cycle of inefficiency and achieving balanced and sustainable economic growth.