This year’s government work report puts forward special measures to enhance the consumption capacity, increase the supply of high-quality products, improve the consumer environment, release diversified and differentiated consumption potential, and promote the upgrading and improvement of consumption quality. Not long ago, the State Administration for Market Regulation, the National Development and Reform Commission and four other departments jointly issued the “Three-Year Action Plan for Optimizing the Consumption Environment (2025-2027)”, which also proposed the implementation of the consumer supply quality action. It made specific arrangements around physical consumption, service consumption, and consumption scenarios, aiming to boost consumer confidence, stimulate economic vitality, and provide a guideline for action. With the improvement of people’s living standards, consumption has increasingly become a key driver of economic growth, and plays an important role in smoothing the economic cycle. Improving the level of supply quality and promoting consumption upgrading with high-quality supply is an inevitable requirement for expanding domestic demand on all fronts and promoting high-quality economic development.

China’s consumption structure is continuously optimized

Since last year, China has vigorously promoted the “two new” work, comprehensively implemented a series of consumption promotion policies, such as the renewal of old consumer goods. These measures have played a positive role in boosting residents’ consumption demand, stimulating the vitality of the consumer market, and promoting the optimization of the consumption structure, which has strongly supported the rebound of the national economy and its high-quality development.

First, the proportion of service-oriented consumption expenditure has been expanding. With the continuous growth of residents’ income level and the expansion of consumption fields, China’s consumption demand in the fields of tourism, healthcare, children’s education, culture and information industry and other services has been growing steadily. In 2024, the national per capita consumption expenditure on services was 13,016 yuan, an increase of 7.4% year-on-year, which was 2.1 percentage points higher than the growth rate of the per capita consumption expenditure of residents; The proportion of per capita service consumption expenditure in per capita consumption expenditure was 46.1%, 0.9 percentage points higher than that in 2023. In the same year, national retail sales of services increased by 6.2% year-on-year, with a growth rate 3 percentage points higher than that of retail sales of commodities in the same period, becoming the main driving force for consumption growth.

Secondly, bulk consumer durables continue to be upgraded and replaced. In 2024, China coordinated the arrangement of ultra-long-term special national bond funds to support the replacement of consumer goods with old ones, and made every effort to promote the replacement of bulk consumer durables such as automobiles, home appliances, home furnishings and kitchens and bathrooms, and achieved significant results. According to statistics, in 2024, the scrapping and replacement and renewal of automobiles nationwide exceeded 6.5 million units; the annual domestic retail sales of new energy passenger cars reached 11 million units. In addition, in 2024, the retail sales of household electrical appliances and audio-visual equipment in units above the quota exceeded the trillion yuan mark, an increase of 12.3% compared with 2023; the sales of 8 types of home appliances in exchange for new ones exceeded 62 million units, which directly stimulated consumption of nearly 270 billion yuan.

Thirdly, new hotspots for new consumer products and scenes continue to emerge. In 2024, the National Development and Reform Commission and other five departments jointly issued the “Measures on Creating New Consumption Scenes and Cultivating New Growth Points in Consumption”, which focuses on areas such as culture and tourism, sports, elderly care and childcare, and community consumption, and puts forward a number of specific tasks and initiatives, and actively promotes the measures to see the results on the ground. According to statistics, in 2024, the new industry and mode of consumption represented by online shopping developed rapidly, and the online retail sales of physical goods increased by 6.5% over 2023, with a growth rate 3 percentage points higher than that of total retail sales of consumer goods. In the same year, the new mode of “Internet+Service” consumption continued to expand, with online tourism and online catering realizing increases of 48.6% and 17.4%, respectively, constantly stimulating new consumption potential.

Consumption quality upgrade faces obstacles

In recent years, although China’s consumer market in general has shown steady growth, in terms of products, services and new consumption patterns, there are still shortcomings in the supply system, which makes it difficult to meet the demand for high-quality economic and social development and restricts the further improvement of the quality of residents’ consumption.

Firstly, there is a structural imbalance in product supply. At this stage, the total supply of all kinds of products in China is sufficient, but in general, there is a structural contradiction of excess supply at the low-end and insufficient supply at the high-end. Since the new era, people’s living standards and quality of life have been improving, and there is a growing demand for high-quality products with brand influence. However, compared with the new changing trend of residents’ consumption upgrading, China’s supply-side adjustment is relatively lagging behind, with insufficient supply of high-quality, high value-added products and serious product homogenization, leading to waste of resources and imbalance between supply and demand in the market. In addition, The problem of Chinese brands being numerous but not refined, large but not strong still exists. Compared with international well-known brands, the market recognition and consumer reputation of domestic brands still have much room for improvement.

Secondly, the supply capacity of high-quality services needs to be improved. At present, China is in the stage of faster growth of service consumption. People’s demand for services in areas such as home improvement, travel, tourism, and express delivery continues to expand, showing new features and trends of personalization, customization, and diversification.However, the innovation ability of China’s service industry is relatively insufficient, and the depth of application of advanced technologies such as big data, artificial intelligence, cloud computing and other advanced technologies in the service field is insufficient, resulting in poor transmission of information on supply and demand, and difficulty in accurately matching consumer demand with service supply. In addition, the level of standardization and normalization of the service industry needs to be improved, and the lack of unified service standards and monitoring and evaluation systems in some areas has led to problems such as low prices and disorderly competition, affecting the overall improvement of the quality of service supply.

Thirdly, the supply of new types of consumption has yet to be perfected. Despite the emergence of new types of consumption business, the innovative strength and diversity of consumption scenes are still insufficient, and the consumption scenes in emerging areas such as digital consumption, green consumption and health consumption have not yet been fully developed, making it difficult to meet the demand of consumers for personalized and immersive experiences. In addition, there is a regional imbalance in the construction and promotion of new consumption scenes. First-tier cities and developed regions are leading in the construction of consumption landmarks and the building of digital consumption ecosystems, and new consumption scenes centered on digitalization and intelligence have been formed in cities such as Beijing, Shanghai and Shenzhen. In contrast, small and medium-sized cities and rural areas are lagging behind in the construction of digital infrastructure and have a single consumption scene, making it difficult to meet consumers’ pursuit of a high quality of life.

Precise measures to stimulate consumption potential

At present, the promotion of consumption upgrading should adhere to the problem-oriented approach, taking improving the supply quality level as an important means, focusing on the shortcomings and key issues in products, services and new consumption areas, and continuously optimize the supply system through the precise implementation of measures, so as to stimulate the consumption potential with high-quality supply and achieve a positive interaction between supply upgrading and consumption upgrading. Specifically, we should start from the following three aspects.

First, optimize the product supply structure. We should deeply implement the “three products” strategy of increasing variety, improving quality and creating brands in the consumer goods industry, focusing on key areas closely related to people’s quality of life, such as automobiles, household appliances and electronic products. We should improve the quality standard and certification system, accelerate the research and development and production of intelligent and green products, and upgrade the overall quality level of the industrial chain and supply chain to meet consumers’ demand for high-end products. The overall quality of the industrial chain supply chain should be improved to meet the demand of consumers for high-end products. At the same time, we should continue to optimize the environment for brand development, further improve the brand cultivation mechanism and policy support system, guide enterprises to improve their brand management capabilities throughout the whole life cycle from creation to operation, to create a number of national brand benchmarks with market and international competitiveness, so that high-quality domestic products become the “new business card” of Made in China.

Second, improve the quality of service supply. We should accelerate the optimization of the standardization layout of the service industry, and improve the technical, process and management standards in the fields of tourism, medical and health care, modern logistics, and elderly care by strengthening the linkage between the departments and localities, the government and the market, so as to promote the improvement and expansion of the quality of service consumption through the standardization construction. At the same time, the construction of the certification system and quality monitoring and evaluation system in the field of service consumption should be strengthened, and the results of certification validity sampling and quality monitoring and evaluation should be released on a regular basis, so as to enhance the transparency and credibility of the service industry, and help the healthy and orderly development of the service consumption market. In addition, enterprises should be encouraged to actively introduce emerging technologies such as the Internet, big data, artificial intelligence, etc., so as to achieve efficient matching of supply and demand information through big data analysis and intelligent platforms for real-time docking of consumer demand, and to enhance consumers’ service experience.

Third, cultivate new types of consumption business. In line with the trend of consumption upgrading, we should focus on digital consumption, green consumption, healthy consumption and other areas to create new consumption scenes, and with the help of cutting-edge technologies such as virtual reality and augmented reality, we should promote the digital transformation of consumption fields and consumption scenes, and create an all-around sensory experience with a greater sense of immersion and interactivity for consumers. In addition, the construction of new infrastructure such as 5G networks, Internet of Things and cloud computing should be accelerated in small and medium-sized cities and rural areas around major national regional development strategies, and the county business construction action should be implemented in depth, combining with local characteristics and resources to create new consumption scenarios with regional characteristics, so as to push forward the coordinated development of new consumption modes on a nationwide scale.