As China’s consumption picture changes, think tank argues, so must its policies

The Anbound report pointed out that measures to promote consumption continued to focus on the supply side, primarily targeting “collective consumption” – goods and services directly provided by the state or otherwise dependent on regulatory intervention – including real estate, automobiles and service industries aided by subsidy.

“From China’s current mainstream macroeconomic perspective, the logic of consumption still starts from the supply side,” Anbound said. “Within this policy framework there are many tools available, such as industrial funds and subsidies.”

However, these time-tested methods have not taken revolutionary shifts in the consumer sector into account, Anbound said, relying instead on existing modalities that might not address “more complex underlying issues” or reflect current trends.

“Once the macroeconomy recognises mass consumption and regards it as an important strategic path for economic development,” the report authors said, “it must inevitably confront these underlying issues and the systemic problems they create, which would be undoubtedly challenging.”

Anbound said in the present environment Chinese consumers are gravitating towards higher quality products to satisfy their needs, while investments in premium shopping have outpaced those in traditional consumer sectors as well as high-end luxury markets.

Young consumers were also found to be more willing to pay for emotional satisfaction, splurging on experiences like concerts and shows they believe will make them happier.

The educational tourism market grew nearly 62 per cent in 2023 to 146.9 billion yuan, with market value expected to reach 242.2 billion yuan by 2026, according to iiMedia Research, an industry research firm.

Earlier this month the State Council - China’s cabinet - released a 20-point directive vowing to increase support for a wide range of services, which taken as a whole have outpaced goods in growth.