China’s emotional economy is on the rise

28-year-old Rebecca Zhou, born in China’s Sichuan province, owns an assortment of Moomin merchandise — bags, mugs, and figurines featuring the white hippo-looking cartoon character from Finland — that she has accumulated over the years.

By her own admission, many of these purchases may seem “childish”, but “it is [just] nice to treat yourself to something fun, even if it is not the most value-for-money,” Zhou said.

Zhou is not alone. Data from analysts and official sources show that Chinese consumers are increasingly spending on goods and experiences chosen for their emotional resonance over practical value — everything from theme parks to jewelry.

But what may once have been a fairly unsurprising consumer impulse is now being taken seriously by China’s business leaders and policymakers.

China’s “emotional economy” first entered into public discourse in 2024, after a craze over Pop Mart‘s Labubu figurines appeared to signal shifts in Chinese consumer behavior, where a consumer group once characterized by norms of frugality and pragmatism appeared just as willing to splurge on self-indulgence.

“People are not just buying things,” said Ashley Dudarenok, founder of digital consultancy ChoZan told CNBC in a phone call. “They’re buying feelings, they’re buying identity, they’re buying a sense of connection.”

Over the recent Chinese New Year holiday, data from ChoZan shows that consumers spent significantly less on traditional staples like festive food gifts (known as nian huo), and more on unconventional expenses, like travel experiences and cosmetics compared to the same period in 2023.

“What people used to buy back in the day, like liquor and bulk nuts … were all about social obligations and tradition. Right now, people buy gift boxes, they buy designer toys … and people don’t frown upon that,” Dudarenok said.

This shift from obligatory to more discretionary spending over China’s largest holiday exemplified broader shifts in consumer norms, according to Dudarenok, with Chinese consumers increasingly looking to satisfy desires for personal fulfillment, over more “rational” purchases.

Beyond the Chinese New Year season, a February report from DaXue Consulting also highlighted tangible goods like aromatherapy candles and cosmetics, as growing segments in China’s emotional economy.

One estimate from the iiMedia Research Center projected China’s emotional economy to exceed a valuation of 4.5 trillion yuan ($655 billion) by 2029 — almost double its value in 2024 — as Chinese consumers seek ever-increasing “emotional relief and spiritual satisfaction”.