BEIJING, Jan 20 (Reuters) - China should maintain manufacturing as a reasonable share of its economy and strike the right balance between consumption and investment as well as between demand and supply, President Xi Jinping said on Tuesday. His comments come a day after China said it achieved 5.0% economic growth in 2025, with exporters' diversification efforts helping offset weak domestic demand and U.S. tariff pressure - a balancing act analysts say will be hard to repeat. Calling for "developing advanced manufacturing vigorously," Xi pledged to "make domestic demand the main driving force of economic growth," state media Xinhua reported. Xi was speaking at a seminar on China's next five-year plan attended by provincial officials and other departments. He said all regions and sectors should identify their roles and foster a landscape in which upstream and downstream industries coordinate more closely. Officials have pledged to "significantly" lift household consumption's share of the economy over the next five years, but analysts say the task would be challenging without structural reforms and demand-side stimulus. Since China's property market entered a downturn in 2021, Beijing has channeled resources towards its industrial complex rather than its consumers to meet ambitious growth targets, creating endemic production overcapacity and forcing factories to look for buyers abroad. A state planning official said on Tuesday the country plans to roll out new policies from 2026 to 2030 to spur domestic consumption and tackle "prominent" imbalances in supply and demand, with the services sector becoming a key focus. Vice Finance Minister Liao Min said his ministry will direct more funds towards lifting consumption and improving people's livelihoods this year, although he did not discuss the size of the allocation. The ministry earlier in the day announced an extension of interest subsidies for consumers, consumer-service enterprises and businesses in need of equipment upgrades to the end of 2026 to revive softening domestic demand. Authorities also extended tax incentives for the sectors of elderly care, childcare and housekeeping until the end of 2027. "It seems unrealistic to solely rely on exports to replace domestic demand, and the key to China's stabilization of growth will be services," said Gary Ng, senior economist at Natixis. He said he expected more measures to land in March and April. ($1 = 6.9606 Chinese yuan renminbi) (Reporting by Kevin Yao, Ellen Zhang and Ziyi Tang; Editing by Kate Mayberry, Thomas Derpinghaus and Hugh Lawson) (The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)
