Experts urge swift rollout of household income plan

China's household income growth slowed in the first quarter and failed to keep pace with GDP, underscoring the urgency for policymakers to quickly flesh out detailed measures under their previously announced income growth plans, economists said.

Per capita disposable income rose 4.9 percent year-on-year in nominal terms in the first quarter to 12,782 yuan ($1,870), or 4 percent in real terms after adjusting for inflation, according to the National Bureau of Statistics. Both nominal and real growth rates were slightly lower than the full-year 2025 figures, down 0.1 and 1 percentage point, respectively.

Household spending slowed even further in the first quarter. Per capita consumption expenditure reached 7,955 yuan in the January-March period, up 3.6 percent year-on-year in nominal terms and 2.6 percent in real terms — down 0.8 and 1.8 percentage points from the 2025 full-year levels, respectively.

While economic growth has stabilized, income growth remains out of sync with the pace of recovery, said Zhang Jun, chief economist at China Galaxy Securities.

"Middle and low-income groups have a higher propensity to consume, but their income improvements have been slow, and precautionary savings intentions remain strong," he said.

The average propensity to consume, the ratio of per capita spending to disposable income, stood at 62.2 percent in the first quarter of this year, down from 63.3 percent in the same period of 2024 and 63.1 percent in 2025, according to Yuekai Securities.

This year's Government Work Report called for the formulation and implementation of income growth plans for urban and rural households, with practical measures to "boost earnings of low-income groups, increase property income, and refine the remuneration and social security systems".

The urgency of introducing concrete steps has grown after first quarter data showed the benefits of economic expansion are not yet flowing as quickly to households as policymakers would like.

Huang Qunhui, a researcher at the Institute of Economics of the Chinese Academy of Social Sciences, said consumer behavior is fundamentally determined by expected income, not just current income."If the income growth plans can be introduced, they will help improve residents' future income expectations and effectively boost consumption," he added.

Wages remained the largest contributor to household income, accounting for 57.3 percent of disposable income, with per capita wage income rising 4.9 percent to 7,319 yuan, according to NBS data.

For most households, wage income is the primary source of earnings, making stable employment the fundamental guarantee for raising wages.

Huang called for increased support to micro and small-sized enterprises and labor-intensive industries, expansion of employment opportunities in new business forms and enhanced vocational training to help workers move into higher-value jobs.

Beyond wages, expanding diversified income channels has become a crucial strategy for optimizing the income structure of Chinese households, economists said, as the government seeks to boost consumption by putting more money into people's pockets.

"A major reason for the relatively low share of household income in the national total is the insufficient contribution from property income," said Luo Zhiheng, chief economist at Yuekai Securities.

With the real estate market still languishing, China could turn to its capital markets to fill the gap. According to data from the Shanghai and Shenzhen stock exchanges, 3,548 listed companies paid a total of 2.55 trillion yuan in cash dividends last year, a year-on-year increase of 6.3 percent.

Policymakers made it clear in this year's plan for national economic and social development that it will "guide listed companies to more actively conduct cash dividends and share buybacks to increase residents' property income".

While listed companies have made notable progress in the scale and frequency of dividends, deep-seated issues remain compared with mature capital markets, said Tian Xuan, dean of Guanghua School of Management at Peking University.

These, according to Tian, include insufficient dividend stability, wide disparities in payout ratios across industries and companies and the need for stronger regulatory oversight.

He suggested improving incentive and constraint mechanisms, encouraging long-term and sustainable dividend policies, linking payouts to corporate performance, and requiring timely public disclosure of dividend policy formulation and implementation.

China should also strengthen social security and redistribution mechanisms to reduce precautionary saving and give consumers confidence to spend, analysts said.

"Without adequate protections against health, education and retirement risks, households tend to save more and spend less," said Wang Qing, chief macro analyst at Orient Golden Credit Rating International."A well-developed social security system acts as a crucial prerequisite for residents to dare to consume."

Wang called for further improving the social security system by increasing basic old-age benefits for rural and nonworking urban residents and the reimbursement ratio of basic medical insurance, while promoting equal access to basic public services.

He also emphasized the need to increase transfer payments, with priority given to rural regions, underdeveloped areas and low-income groups. Through fiscal subsidies and social assistance, the basic living needs of low-income households can be safeguarded.