From crowded cinemas to booming livestream shopping sessions, a surge in consumer vitality is unfolding across China. As global uncertainty clouds export prospects, China is placing greater emphasis on domestic consumption as a key driver of growth, tapping into the spending power of more than 1.4 billion people to anchor its next phase of development.

That shift was underscored at a recent national conference on the service industry, where officials called for adapting to demographic changes, upgrading consumption patterns and accelerating industrial transformation. The message was clear: the service sector will play a pivotal role in unlocking domestic demand and sustaining economic momentum.

At the heart of this strategy is a reinforcing cycle. As Chinese consumers demand better healthcare, richer cultural experiences and more convenient services, businesses are pushed to innovate. In turn, an expanding and higher-quality service sector is creating new consumption scenarios – from immersive entertainment to personalized eldercare – encouraging households to spend more. Demand drives supply, and supply generates new demand.

Transitioning economic model

This evolving dynamic reflects a deeper transition in China's economic model. For decades, China's growth relied more on exports and investment. Today, with raising external risks, domestic consumption is being positioned as both the primary engine of growth and a buffer against global volatility.

Recent figures highlight the scale of this shift. Consumption accounted for 52% of China's economic growth last year, while total retail sales of consumer goods surpassed 50 trillion yuan (about $7.3 trillion) for the first time. Spending is also changing in nature: services now make up 46.1% of per capita consumption, a share that continues to rise as households prioritize quality of life.

To sustain this momentum, policymakers are working on both sides of the equation – boosting consumers' ability to spend and improving what the market has to offer. Measures to raise incomes and strengthen social safety nets aim to reduce financial anxieties, while efforts to build a unified national market and enhance product and service quality are designed to make spending more attractive.

The policy push is already visible in everyday life. Since the start of 2026, several regions such as east China's Zhejiang and Jiangsu provinces have raised minimum wages, lifting top-tier monthly levels to around 2,600 yuan. Families are receiving greater support as well, including annual subsidies for children under three and higher pension payments for retirees. These measures are intended to ease long-term concerns about healthcare, aging and childcare – factors that often weigh on household spending decisions.

"More resources would be directed toward the public sector this year to ensure people are able, willing and confident to consume," Lou Qinjian, a member of the 14th Standing Committee of the National People's Congress, said during this year's Two Sessions.

Fiscal policy is reinforcing that goal. This year, China has allocated 250 billion yuan in ultra-long-term special treasury bonds to support consumer goods trade-in programs, alongside a broader package of measures combining fiscal and financial tools to stimulate domestic demand.

These trade-in programs are already gaining traction. In 2025, government support helped generate more than 2.6 trillion yuan in related sales, and the momentum has carried into 2026, with first-quarter figures showing over 433 billion yuan in transactions benefiting more than 60 million consumers, according to data released by the National Reform and Development Commission.

By encouraging households to replace old appliances, vehicles and electronics, the policy is not only boosting consumption but also accelerating the shift toward greener and smarter products.

Emerging new consumption trends

Beyond policy support, new consumption trends are reshaping the landscape. Service consumption is expanding rapidly, driven by rising demand for elderly care, healthcare, tourism and sports. At the same time, electric vehicles, smart home devices and environmentally friendly products are becoming increasingly popular. New business models – from quick commerce (such as 30-minute delivery) to livestream e-commerce – are blurring the boundaries between shopping, entertainment and social interaction.

Besides, growth is no longer confined to major cities. In smaller cities and rural areas, improving infrastructure and rising incomes are unlocking new demand. Local governments are building commercial hubs, upgrading retail networks and tailoring development strategies to local conditions, turning these markets into important new engines of consumption.

Official data revealed the vitality of China's consumption. In the first quarter, offline consumption payments rose 3.4% year on year, while goods consumption increased by 5.2%. During the three-day Qingming Festival holiday, domestic travel reached 135 million trips, with tourism spending climbing to over 61 billion yuan – another sign of consumers' growing willingness to spend on experiences.

China's push to expand domestic demand is also drawing attention from global businesses. Wu Xuchu, vice chairman and chief partner of the northern region at KPMG China, has noted that the country's vast market and the growing space for service consumption offer strong opportunities for multinational companies.

For firms like Nestle, the shift is already translating into concrete investment decisions. Chief Executive Officer Philipp Navratil said during this year's China Development Forum that China's emphasis on boosting domestic demand has created "significant opportunities." More than 90% of Nestle's products sold in China are now locally produced, with recent investments exceeding 5 billion yuan in areas such as pet food and infant nutrition.

As China navigates a more complex global environment, its renewed focus on consumers signals more than a short-term policy adjustment. By linking income growth, social policy and industrial upgrading, the country is building a more resilient, internally driven growth model – one that could reshape not only its own economic trajectory, but also its role as a source of global demand in the years ahead.