China's new consumption patterns drive domestic demand upgrade

TIANJIN - Pet owners are splurging on smart litter boxes, blind boxes are flying off shelves overseas after going viral in China, and new tea drinks are becoming the go-to choice for young people.

With continuously optimized retail efficiency and the rising spending power of young consumers, China's consumption sector has witnessed a notable shift toward new channels and product categories.

At the 2025 Haihe International Consumption Forum in North China's Tianjin municipality on Tuesday, heated discussions on such topics as ways to ignite new engines for domestic demand came under the spotlight.

Participants noted that new consumption -- characterized by behaviors and methods driven by new technologies -- has become an important force in meeting people's needs. This has unleashed consumption potential and boosted economic development, thereby activating new growth drivers for China's economy.

Artificial intelligence is reshaping the consumption landscape on both supply and demand sides. Thierry Delmarcelle, chief strategy and innovation officer of Deloitte Asia Pacific, said at the event that AI can boost consumption and accelerate China's transition toward becoming a consumption-driven economy.

For example, the penetration rate of Navigate on Autopilot (NOA) -- an important AI application scenario -- in passenger vehicles is expected to reach 20 percent by the end of this year.

In March, China unveiled an action plan to boost consumption, prioritizing it as a key economic task for 2025. The plan proposed an "AI Plus" initiative to promote the integration of AI and spending.

The automotive industry is undergoing a sweeping intelligent transformation. Changan Automobile has announced it will halt its development of non-intelligent new products. BYD has equipped more than 20 new energy vehicle models with intelligent driving systems. And Li Auto's intelligent driving systems logged a total mileage of about 3 billion kilometers in 2024.

This consumption upgrade wave driven by new spending patterns is not only evident in high-value, durable goods like automobiles, but also in subtle changes in everyday consumption scenarios.

Roger Hu, managing director and partner of Boston Consulting Group, noted during the forum that China's shopping habits are breaking into clear layers, with consumption scenarios for similar products becoming increasingly diversified.

"For example, a consumer drinks eight cups of water a day. Among these, there is water for staying alert, water for relaxing, and water for socializing to bridge distances," Hu said, adding that given China's massive consumer base, meeting the demand for "each cup of water" represents an opportunity in market segmentation for consumption.

Wang Pu, co-founder of drink brand Chi Forest, said that significant consumer attention to Chinese brands and growing demand for healthy consumption have motivated companies to upgrade their technologies and products.

Chi Forest launched a new product in 2023 that uses traditional Chinese medicine ingredients to meet consumer demand for both taste and health benefits. "Sales of this product exceeded 100 million yuan ($14 million) within four months of its launch, making it one of our fastest-growing new products," Wang said.

New consumption patterns such as those related to the green economy, the culture and tourism economy, and the debut economy have gradually become new engines driving spending, with supportive policies accelerating across regions.

Wang Yagang, deputy director general of the Tianjin municipal bureau of commerce, said that Tianjin is accelerating its cultivation of landmark debut economy clusters. Since last year, the city has hosted over 400 related events, and it will soon introduce policies to support the debut economy.

Zhu Keli, founding dean of the China Institute of New Economy, noted that from the consumption perspective, the debut economy effectively transforms consumer curiosity into purchasing power.

"As new business forms and models like the debut economy continue to grow, the role of new economic drivers will become increasingly prominent, serving as indispensable sources of momentum to promote the high-quality development of China's economy," Zhu said.