China Bets on Experiences to Restart Spending
China is shifting its consumption strategy away from big-ticket goods and toward services, betting that travel, leisure, culture, and everyday convenience can do more to revive household spending than another round of discounts on cars and appliances. With the property slump still weighing on confidence, and income expectations uneven, policymakers are trying to unlock demand in categories where consumers appear more willing to spend.
A five-year push to expand service supply
China’s cabinet released a work plan to boost services consumption over the next five years, with measures spanning cruise and yacht tourism, elder-care services, and more live performances and sports events. The goal is to “cultivate new growth drivers” in service consumption and expand supply, signaling a deliberate pivot toward a more services-led consumption mix.
The plan includes support for tourism-oriented upgrades to train stations and scenic rail routes, as well as improvements to yacht infrastructure, such as public docks and berths. Authorities also said they would expand visa-free entry for more countries and add tax-refund points at border crossings to lift inbound tourism.
Why services are the new lever
Beijing’s renewed emphasis reflects a difficult domestic backdrop. Spending on goods has been uneven despite trade-in subsidies, and the economy is still contending with weak pricing power. Retail sales growth has lagged industrial output, December consumption softened further, consumer inflation was flat last year, and producer prices have remained in decline, extending a deflationary stretch that pressures profits and wage expectations.
Early indicators compiled by China Beige Book also suggested services activity slowed sharply in January, with weakness reported across travel, hospitality, and chain restaurants. Even so, the broader policy instinct is that services offer more practical traction than goods, especially when households remain cautious about large purchases.
Signs of preference shift toward experiences
Policymakers are not operating in a vacuum. Survey data indicate a gradual shift in what households prioritize. A quarterly survey from the People’s Bank of China suggested that the share of respondents planning to increase spending on social and entertainment activities reached an eight-year high in late 2025. Intentions to spend more on big-ticket items remained well below pre-pandemic norms.
Analysts at S&P Global have framed the shift as partly psychological: emotional satisfaction is playing a larger role, with more spending directed toward self-expression and experiences rather than status purchases. On that view, services can grow faster than goods even if overall consumption remains constrained.
What the plan tries to change in practice
The work plan leans heavily on expanding supply, improving infrastructure, and shaping new consumption formats. It calls for nurturing newer forms of spending tied to emotional experiences and urges a more innovation-friendly regulatory approach for emerging sectors, while still emphasizing prudence.
For live entertainment and sports, the plan aims to increase event supply, encourage more top-tier international competitions, and promote high-quality outdoor sports destinations. On the financing side, banks were urged to expand credit to service-consumption firms and allow eligible companies in culture, tourism, education, sports, and household services to raise funds through bond issuance.
Why economists are cautious
The strategy is attractive politically and economically. Services remain relatively underdeveloped compared with many peers, leaving room to grow, and they are typically more labor-intensive than manufacturing, which matters for employment stability. Economist Intelligence Unit has argued that services align with policy goals at a time when traditional tactics to stimulate retail demand have been losing effectiveness.
Still, skepticism is widespread because spending on services ultimately depends on household confidence, income growth, and the strength of social support systems. Allianz chief investment officer Ludovic Subran has emphasized that raising consumption requires restoring confidence enough to reduce precautionary saving, and that rebalancing depends on jobs, time, and income gains. Rhodium Group partner Logan Wright has similarly argued that underinvestment in social services and high out-of-pocket costs can keep households in a defensive saving posture, limiting the extent to which experience-led consumption can go.
International comparisons underline the challenge. World Bank data show China’s final consumption expenditure share has risen from earlier lows but remains well below levels seen in the United States, the United Kingdom, and Japan. That gap suggests long-run upside, but also highlights how much structural change may be needed to lift consumption decisively.
Pantheon Macroeconomics has also noted that services spending would likely have grown as incomes rose, even without policy support, and that it may take years for incremental gains in services consumption to offset the drag from weaker housing activity. In that sense, the new plan can help at the margin, but the core constraint remains the same: without stronger income expectations and a sturdier safety net, households may keep spending selectively rather than broadly.