Digital consumption a dynamic growth opportunity

During the 15th Five-Year Plan (2026-30) period, China should make coordinated efforts in policy support, technological empowerment, institutional innovation, scenario expansion, and platform globalization to build a more efficient, inclusive and sustainable digital consumption ecosystem, providing stronger momentum for expanding domestic demand and promoting a more efficient circulation between supply and demand.

To start with, the economic development model is shifting from expanding user scale to extracting user value. Digital consumption has already become a mainstream channel in terms of users and market size.

The scale and breadth of digital consumption users in China have reached a remarkable level. According to data from US e-commerce platform SellersCommerce, China's e-commerce retail sales accounted for as much as 47 percent of total retail sales of consumer goods in 2024, far exceeding developed countries such as the United States with 15.8 percent, as well as developing countries like Indonesia with 31.9 percent.

Data released by the China Internet Network Information Center show that in the first half of 2025, China's total digital consumption reached 9.37 trillion yuan ($1.4 trillion), with digital consumers exceeding 958 million, accounting for 85.3 percent of internet users.

This means online and digital consumption have become China's dominant consumption channels, while the era of rapid user growth driven by "traffic dividends" is nearing its end.

First, the deepening of livestream e-commerce has expanded digital consumption beyond standardized goods. In recent years, livestreaming has expanded from categories such as apparel and cosmetics to high-value, high-involvement products such as real estate, automobiles and luxury goods.

For example, some top livestream hosts have partnered with car dealers and property developers to promote high-value purchases such as new vehicles and home subscriptions through livestream sessions.

Second, the rise of content-driven e-commerce has brought a major transformation in digital consumption business models.

In recent years, major content platforms have become entry points for new consumption decisions, shifting consumer behavior from an active "search-and-buy" model to a triggered "discovery-and-purchase" model.

This trend indicates that digital consumption is increasingly centered on shared consumption experiences, which has also driven rapid growth in platform-operated e-commerce and closed-loop transaction volumes.

From a global perspective, China holds a clear lead in digital consumption. However, gaps remain compared with China in infrastructure such as payments and logistics, as well as in deep consumer spending power.

Third, development channels are shifting from online sales to full online-offline integration. Instant retail is driving deep integration between online retail and brick-and-mortar commerce.

It differs from traditional e-commerce by fully digitizing inventory from physical stores and combining platform-based intelligent matching with extensive rider delivery networks to achieve the ultimate experience of "ordering online and receiving delivery within 30 minutes".

Large supermarket chains, convenience stores and brand specialty shops have joined instant retail platforms, digitalizing their inventory and expanding sales across all channels, thereby gaining new growth and making instant retail a key pathway for the digital upgrade of offline commerce.

Behind this is the deep integration and efficiency revolution of digital platforms within local urban commercial ecosystems, redefining the economic value of digital consumption.

In addition, "AI Plus" is developing rapidly in China.

According to Stanford University's AI Index Report 2025, the performance gap between leading Chinese and US AI models on representative benchmark tests has narrowed significantly, shrinking from 17.5 percent in 2023 to just 0.3 percent in 2024.

In foundational areas such as high-end AI chips, core AI frameworks, and breakthroughs in original algorithms, the US still maintains a clear advantage.

China's strengths, however, lie in its vast application scenarios, fast data iteration cycles, and strong commercialization drive. In recent years, the "AI Plus" initiative has accelerated the deployment of large models across industries, unleashing enormous vitality in AI application exploration.

AI is reshaping the entire value chain of traditional consumption. Generative AI has spearheaded a new wave of technological revolution, and AI-driven innovation in the consumer sector is showing rare dynamism.

"AI Plus" consumption continues to create new hotspots, with a growing variety of AI-enabled terminals such as AI smartphones, AI computers, and AI glasses entering the market.

According to data from the China Internet Network Information Center, 45 percent of online shoppers purchased smart products in the first half of 2025, making them a new growth driver for consumption.

In service process automation, intelligent customer service systems can handle the vast majority of standardized inquiries, and AI is increasingly used in after-sales dispute resolution and logistics anomaly warnings, significantly improving service efficiency and user experience.

Fourth, the development focus is shifting from urban services to integrated urban–rural services. County-level and rural areas have become incremental pillars of China's digital consumption growth.

In recent years, the demographic dividend of internet users in first — and second-tier cities has gradually peaked, while vast county, township, and rural markets have formed the deepest "strategic hinterland" for digital consumption.

Data from the China Internet Network Information Center show that as of June 2025, China's rural internet user population had reached 322 million, accounting for 28.7 percent of total internet users. Internet penetration in rural areas had reached 69.2 percent, up 1.9 percentage points from December 2024.

Meanwhile, express delivery services extending into rural areas are activating the rural digital consumer market. In the first quarter of 2025, parcels sent to rural regions accounted for 30 percent of total national express delivery volume, making rural areas a new source of online consumption growth.

In developed Western economies, urban–rural disparities are relatively small, infrastructure and commercial services are evenly distributed, and there is no "sinking market" comparable in scale, consumption potential, and digital gap.

India and Southeast Asia share somewhat similar urban–rural structures, but their overall consumption capacity and infrastructure in logistics and payments are not yet sufficient to support such a complex and dynamic segmented market ecosystem.

Therefore, the development of digital consumption in China's sinking market represents a uniquely Chinese business and policy practice.

Looking ahead, high-quality development of digital consumption will require coordinated efforts in policy support, technological empowerment, institutional innovation, scenario expansion, and platform globalization to better unleash its potential.

The writer is chief economist at Chinese e-commerce platform JD. The article was originally published on Sina Finance Column.

The views do not reflect those of China Daily.