China’s new plan to get consumers spending again

As Chinese households remain reluctant to spend on big-ticket goods, Beijing is leaning on a new lever to revive consumption: experiences and everyday services.

China’s cabinet on Thursday rolled out a work plan to boost services consumption — from cruise and yacht tourism to elder care services and more sports events — as policymakers sought to boost the share of consumption in its economy over the next five years.

The plan aims to “accelerate the cultivation of new growth drivers in service consumption” and to “improve and expand the supply of services,” the notice said.

Beijing’s renewed push came as officials try to shore up domestic demand amid a prolonged property slump, bleak job market and income uncertainty that have kept consumers cautious about major purchases. Concerns are also growing that the export boom that cushioned the economy from U.S. tariffs last year may prove difficult to sustain.

While Beijing has rolled out trade-in subsidies to spur sales of cars and appliances, the rebound in spending has been uneven.

Retail sales grew 3.7% in 2025, lagging industrial output growth of 5.9% and broader economic expansion of 5%. The consumption gauge eased to 0.9% in December while consumer inflation was flat last year and producer prices declined for a third straight year, extending a deflationary stretch that has weighed on corporate profits and wage expectations.

Early indicators compiled by China Beige Book showed services consumption slowed sharply in January, with most sub-sectors, including travel, hospitality and chain restaurants, reporting broad-based weakness.

Even so, economists pointed to an apparent shift in household preferences, with consumers increasingly allocating spending towards services rather than goods.

A quarterly survey by the People’s Bank of China for the fourth quarter of 2025 showed the share of respondents planning to increase spending on social and entertainment activities over the following three months reached an eight-year high. Interest in spending more on “big-ticket” items remained well below pre-pandemic levels.

Meanwhile, consumer priorities appeared to be changing.

“Emotional satisfaction is playing a bigger role in retail spending, with a growing focus on buying for self-expression and experiences rather than for materialistic possessions or brand prestige,” according to a team of analysts at S&P Global.

The rating agency expects China’s retail sales, excluding petroleum, to increase 2.7% in 2026 from last year, with services to grow 5.5%.

In a work plan released Thursday, China’s State Council said it would support “tourism-oriented” upgrades to train stations and scenic rail routes, as well as improvements to yacht infrastructure, including public docks and berths.

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