Economic Watch: China's consumption engine gains momentum with vast potential

HAIKOU, April 18 (Xinhua) -- At the energetic China International Consumer Products Expo, crowds throng exhibit halls packed with global brands showcasing a dazzling array of goods.

From cosmetics and massage chairs to flying cars and humanoid robots, the arrival of retail commodities from all over the world offers a window into the vitality of China's ever-evolving consumer market.

This year's expo, which concluded on Friday, has attracted over 1,700 enterprises and 4,100 brands from more than 70 countries and regions, with a record-breaking 65 Fortune Global 500 companies and industry leaders participating in the six-day event.

The hustle and bustle in Hainan is just one facet of the dynamism of the Chinese market. On a broader scope, official data released this week revealed that retail sales of consumer goods rose 5.9 percent year on year last month -- a marked acceleration from the 4 percent growth reported for the first two months of this year.

In the first quarter of 2025, China's retail sales expanded 4.6 percent year on year, which was 1.1 percentage points faster than in 2024, according to the National Bureau of Statistics.

"Overall, consumer spending in the first quarter of this year continued to improve on the back of policy support," Sheng Laiyun, deputy head of the bureau, said at a press conference, citing pro-spending policies such as the country's consumer goods trade-in program.

"The combination of policies in both supply and demand has successfully stimulated consumer sentiment, with notable impacts on capital markets and retail growth momentum," according to a Deloitte report released at the expo. "This will lay the groundwork for sustained optimism going forward."

EVOLVING SERVICES CONSUMPTION

As pressures of a sluggish global economy mount, market observers say that China's consumption upgrade and economic shift toward services-driven growth -- sustained by a population of over 1.4 billion -- carry immense potential.

At the Hainan expo, services consumption in sectors such as low-altitude aviation, the silver economy, health and wellness, and AI-powered innovation products from global firms, have dominated many booths.

OSIM, which has participated in the expo for five consecutive years, is debuting its latest massage chair and its flagship uDream wellness chair, integrating cutting-edge AI that monitors stress and customizes multi-sensory relaxation.

OSIM sees the expo as a key platform to engage in meaningful conversations with Chinese consumers, said Lin Xiaohui, deputy general manager of brand management and marketing of OSIM North Asia.

"As China's consumption structure upgrades, service-related spending is playing an increasingly important role, especially in sectors like health care, education and entertainment," said Zhang Tianbing, leader of the consumer products and retail sector of Deloitte Asia Pacific.

"Demographic shifts, including an aging population and smaller household sizes, are reshaping consumer preferences in China," Zhang said, adding that health consciousness and digital consumption habits are spreading increasingly across all age groups.

Notably, China's services consumption is expanding at a faster pace than that of goods, with retail sales of services growing 5 percent year on year in the first quarter of 2025.

From January to March 2025, the country's per capita spending on services increased 5.4 percent year on year and accounted for 43.4 percent of its total per capita consumer spending, official data showed.

Kuang Xianming, vice president of the China Institute for Reform and Development, projected that services consumption will exceed 50 percent of China's total consumption by 2030, signaling the country's pivotal shift to a service-driven economy. "This expanding market is highly attractive to foreign companies."

OPEN, SHARED MARKET

Chinese policymakers have positioned the expansion of domestic demand as the paramount priority on the government's economic work agenda for this year, emphasizing increased spending power, improved expectations and strengthened consumer confidence.

The country's focus on domestic tasks is particularly meaningful against the backdrop of a complex international landscape. By maintaining high-standard opening-up and promoting a more sustainable consumption recovery, China seeks to share its opportunities with the global community.

"Expanding domestic consumption is not only key to high-quality development but also a strategic move amid global economic uncertainties," Kuang told Xinhua.

More importantly, as China continues to open up, this ever-expanding market will become a shared market, he said.

"We see a lot of encouraging signs by the Chinese government to help boost local consumption. So we're very excited about what's to come," said Mike Hofmann, managing director at Tricker's China, one of the UK's oldest established shoemakers. This is the second time his company is exhibiting at the expo, which helped them raise brand awareness in China last year.

In a key move in China's opening-up strategy, the Hainan Free Trade Port is set to begin independent customs operations by the end of the year, and global enterprises are eyeing the vast opportunities that come with open trade.

"Its success will not only benefit China but also provide valuable insights for economies worldwide," said Zhang Xiangchen, deputy director general of the World Trade Organization.

Douglas Alexander, minister of state of the British Department for Business and Trade, is also looking forward to the launch of the Hainan Free Trade Port's independent operations.

"The UK is keen to explore the opportunities for free and open trade - trade which benefits both Chinese and British firms," Alexander said. The United Kingdom is the guest country of honor at this year's expo, showcasing 53 brands across the fashion, beauty, homeware, health and jewelry industries, doubling its 2024 presence.

Dong Debiao, partner at Deloitte China strategy and client center, told Xinhua that he expects the independent customs operations of Hainan's free trade port to drive consumption further.

Hainan is also likely to become a consumption hub linking China and Southeast Asia, with unique advantages in the high-end retail and services trade sectors, he said. ■