China is hoping market liberalization and giving firms incentives to produce better products and improve services will persuade the country's growing middle classes to spend their money inside the country rather than abroad.

Chinese spent 1.2 trillion yuan (184.86 billion U.S. dollars) overseas last year, said a spokesperson for the top economic planner on Monday.

Zhao Chenxin, of the National Development and Reform Commission, said at a press conference that China had a shortage of high-end commodities and an "unsound consumption environment."

To fix this, the government will open the market wider to private capital and loosen restrictions on foreign enterprises, while encouraging innovation among all firms, said Zhao.

The spokesperson also promised stricter regulations to protect intellectual property and guarantee product quality.

Other measures will include opening more duty-free shops, exploring new channels to expand imports and developing consumer credit services.

China's growth model used to be based on trade, investment and heavy industry, but it is now being shifted to rely more on consumer spending.

In 2015, consumption contributed 66.4 percent to GDP, up 15.4 percentage points from 2014. The service sector contributed 50.5 percent to the economy last year, up from 48.1 percent in 2014.

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