Measures to spur services consumption

China has rolled out sector-specific measures aimed at boosting services consumption, officials and analysts said, pointing to an ongoing structural shift in domestic demand, where spending on services is increasingly becoming a key growth driver.

Coupled with consumer goods trade-in programs, Beijing is doubling down on its efforts to transition toward a more consumption-led growth model at a time when external demand remains uncertain, they added.

Their comment came after the State Council, the country's Cabinet, released a work plan in late January to accelerate the cultivation of new growth drivers in service consumption.

Targeting key sectors such as transportation services, domestic services, online audiovisual services, sojourn tourism services, automotive aftermarket and inbound consumption, the plan calls for measures to boost growth by improving service supply, advancing pilot programs, fostering innovative consumption scenarios and strengthening talent development.

For potential sectors including performance services, sports event services, and emotion and experience-oriented services, measures will be taken to cultivate new momentum by refining incentive mechanisms, enhancing safety management, fostering high-quality brands, and building supporting platforms, according to the plan.

It also underscores the need to strengthen policy support by improving standards systems, enhancing credit development, and increasing fiscal and financial support to provide solid safeguards for cultivating new growth points in service consumption.

"In recent years, as living standards have improved, the consumption structure of Chinese households has been shifting from a goods-dominated model to one where both goods and services carry equal weight," said Kong Dejun, director-general of the ministry's department of trade in services.

Between 2020 and 2025, per capita service-related consumption expenditure grew at an average annual rate of 8.5 percent. Its share of total household spending rose by 3.5 percentage points during the same period, reaching 46.1 percent of household consumption in 2025, according to ministry data.

"Looking ahead, China's service consumption sector is entering a critical strategic window and will play a significant role in lifting the household consumption rate and driving high-quality economic development," Kong added.

To fully leverage the catalytic role of fiscal funds, expand the supply of high-quality consumer services, foster diversified consumption scenarios, and effectively unlock consumption potential, the Ministry of Commerce and the Ministry of Finance have, since September last year, initiated pilot programs to promote new forms, models, and settings of consumption.

The two ministries selected 50 pilot cities, identified a list of proposed projects for support, and disbursed an initial batch of 8.6 billion yuan ($1.25 billion) in fiscal funding to these cities.

"The permanent resident population of the pilot cities exceeds 480 million, and their total retail sales of consumer goods account for more than half of the national figure," said Vice-Minister of Commerce Yan Dong.

"This vast market scale provides ample room to explore pathways for cultivating new growth drivers, accelerating the development of new business models and formats that are market-validated and endogenously driven," Yan added.

Data from the National Bureau of Statistics showed that China's service retail sales grew by 5.5 percent year-on-year in 2025, outpacing the growth of goods retail sales by 1.7 percentage points.

Sub-sectors such as culture, sports, tourism and transportation all maintained double-digit growth in retail sales.

Services consumption, analysts note, offers a pathway to that economic rebalancing that also aligns with broader social priorities: aging-in-place services for a graying population, cultural enrichment for an increasingly educated citizenry, and sustainable tourism that distributes economic activity beyond coastal manufacturing hubs.

International experience shows that once GDP per capita exceeds $10,000, the pace of consumption upgrading tends to accelerate significantly, said Luo Zhiheng, chief economist and head of the research institute at Yuekai Securities.

By comparison, the share of services consumption in total household spending in China is still below the 60-70 percent range typical of developed economies, indicating considerable room for further expansion of the services consumption sector as a whole, Luo added.

"Rapid urbanization is fueling demand for residential services, child care, and elderly care. Young consumers, seeking novel experiences, are driving robust growth in cultural tourism and leisure activities," Luo said.

China's snow-dusted slopes, in particular, have emerged as a powerful engine of service consumption, with ski resorts nationwide recording 118 million visits during the peak winter season from November 2025 through January 2026, according to the General Administration of Sport of China.

The three-month period saw total spending at and around ski facilities reach 69.15 billion yuan, generating 890 million transactions — a 6 percent year-on-year increase, said Ai Yu, a senior official from the administration.

More striking was the surge in inbound tourism: about 1.26 million overseas visitors hit the slopes, an 89.2 percent jump over the previous year, Ai said.

China's service consumption sector is also opening wider to the outside world. The country has optimized visa-free and tax refund policies to facilitate inbound tourism.

China has extended its unilateral visa-free policy to over 40 countries, including many in Europe, North America, and Oceania, until Dec 31, 2026, allowing stays of up to 30 days for business, tourism, family visits and exchange.

In addition to visa-exemption arrangements, China has expanded the 240-hour visa-free transit policy to 65 ports across 24 provincial-level regions.

There is a huge rush among international tourists to visit China during Spring Festival, with flight bookings soaring 400 percent in the two weeks before the festival compared to the same period last year, data from online travel platform Trip.com Group showed.

Leading the trend are travelers from Argentina, from where bookings skyrocketed 900 percent year-on-year, while bookings from European nations, including the Netherlands, Spain and the United Kingdom, all saw increases exceeding 200 percent.

Vice-Minister of Commerce Sheng Qiuping revealed that the country's 13,000 tax-refund shops for overseas visitors are already stocked with premium products, and that the refund program offers foreign visitors shopping in China a discount of about 10 percent on their purchases.

Last year, the number of overseas visitors claiming tax refunds surged by 305 percent year-on-year, data from the State Taxation Administration showed.

"China has so many shops and there are so many styles available. It is really interesting to go around and check what Chinese brands provide," said Ekaterina Ermakova from Russia, who is visiting Beijing, adding, "I really love that Chinese people are very conscious about their culture."

Cheng Shi, chief economist at ICBC International, said that the influx of international consumers, who have higher expectations from product quality, brand diversity, service standards and convenience, will push the domestic commercial system to accelerate its alignment with international norms.

The improvements in the internationalized consumption environment are not exclusive to foreign visitors; they also enhance the consumption experience for local residents, thereby unlocking higher domestic consumption potential, Cheng added.

wangkeju@chinadaily.com.cn