Summary of Key Points
This year, the national and local governments have introduced a series of policies to promote service consumption in sectors such as dining, culture and tourism, and elderly care. Service consumption now accounts for 46.1% of residents' total spending, becoming the main driver of growth. However, there is still room for improvement compared to developed countries (such as 66% in the United States and nearly 60% in Japan). Currently, service consumption faces challenges such as insufficient supply and a lack of standardization. In the future, it will be necessary to unlock its potential by optimizing supply, improving policies, and reforming income and social security systems.
I. Service Consumption Is on the Rise, Accounting for Nearly Half of Residents' Spending
How much of your money do you spend on services—eating out, traveling, hiring domestic help, watching movies, etc.? These activities now account for nearly half (46.1%) of your spending. Data shows that from 2013 to 2025, per capita service consumption increased from 5,000 yuan to 14,000 yuan, almost tripling in value. Moreover, the growth rate of service consumption is 11 percentage points higher than that of goods such as clothing and household appliances. The figures for the first half of the year are even more pronounced: service retail sales grew by 5.3%, while goods only increased by 1.1%.
Why is this happening? According to the National Bureau of Statistics, this reflects a trend of consumption upgrading—just as in developed countries where people are more willing to spend on services rather than just buying goods when they have more money.
II. Three Key Drivers Behind the Surge in Service Consumption
1. Income Levels Reaching a Transition Point: China's per capita GDP has reached 14,000 US dollars. Based on international experience, at this stage, consumption shifts from buying goods to buying services.
2. Demographic and Family Changes: The population is aging, with an increasing demand for home care and elderly care services. Young people prefer personalized experiences (e.g., "one-person dining" and the pet economy), and smaller families are more likely to outsource household chores and meals.
3. Policy Support: The government has prioritized service consumption in its 15th Five-Year Plan for expanding consumer spending, and local authorities have issued consumption vouchers (for example, Shanghai allocated 500 million yuan to support the dining and tourism industries) to encourage people to spend more on services.
III. Challenges Faced by Service Consumption
Despite its growth, there are several issues:
1. Insufficient Supply: For instance, there are fewer than 30 elderly care beds per thousand elderly people in China, compared to 50-70 in developed countries. In the tourism sector, many attractions lack uniqueness and fail to attract visitors.
2. Lack of Standards: There is no uniform standard for services such as domestic help; the quality of education and medical services also varies widely.
3. Limited Consumption Capacity: Some people want to consume but do not have the money, or they are cautious about spending on elderly care and healthcare expenses.
4. Regulatory Challenges: Some services (like online education and the sharing economy) involve multiple departments, making coordination and regulation difficult.
IV. How to Boost Service Consumption
A combination of policy support and supply optimization is needed:
1. Policy Support: The national 15th Five-Year Plan proposes relaxing entry barriers for the service industry and fostering new growth areas (e.g., health and premium international services). Local governments should issue consumption vouchers, but long-term income issues must also be addressed.
2. Supply Optimization: For example, using digital technology to monitor tourist traffic and increase visitor stay times and repeat visits in tourism; increasing the number of elderly care beds while improving service quality; establishing uniform standards for domestic help services to reassure consumers.
3. Addressing Fundamental Issues: Reforming income distribution and improving social security systems to encourage people to spend more on services.
V. The Role of Consumption Vouchers
While consumption vouchers (such as those for dining and tourism in Shanghai) can boost spending in the short term, they should not be relied upon:
- They are temporary tools whose effectiveness depends on how they are distributed (e.g., whether there are restrictions or who they cover).
- There are significant regional differences; financially strained areas in central and western China may not be able to issue many vouchers, and money spent in these regions often flows to eastern cities.
- The key lies in improving people's income levels and social security systems to create a sustainable demand for services.
In summary, service consumption is the future of consumer spending. To ensure its sustained growth, it is essential to address challenges related to supply, income, and regulation. Only by combining policy efforts with market dynamics can we encourage people to spend more on services.