Households ramp up spending on services
Chinese consumers are spending a growing proportion of their income on services.
Per stats bureau (NBS) household expenditure data, services accounted for 44.5% of household consumption in H1 2025, up from 43.5% the previous year.
Why we care about service consumption: As China’s middle class expands, consumers will satiate much of their demand for cars, home appliances, and other durable goods.
- For consumption to remain a key driver of economic growth, spending must shift toward services, such as tourism, dining out, and eldercare.
Spending on services dropped sharply during the pandemic – as lockdowns prevented folks from travelling and eating out – but has since rebounded with a vengeance.
- Since 2022, household expenditure on services has jumped 25%, compared to a 12% increase in spending on goods.
This isn’t just a short-term phenomenon: Growth in services expenditure has consistently outpaced growth in goods for years now.
- Since 2008, per capita expenditure on services has increased at an average annual rate of ~15%, compared to ~9% for goods.
Get smart: Businesses and investors take note.
- As services account for an increasingly large share of household spending, future consumption growth will rely less on consumer durables and more on discretionary spending, like travel, leisure, and eldercare.
Get smarter: Services consumption is far more cyclical in nature – since households can easily cancel travel plans or dine out less – leaving it more vulnerable to economic shocks, such as the pandemic.
- That means China’s services-led consumption growth may prove less resilient than the goods-driven boom of past decades.
