Will AI and Robots Fuel China’s Next Big Consumer Boom?

China is looking for the next major products to motivate consumers to spend more. Technology seems to play a crucial role in this strategy.

Last Sunday, China released a fresh action plan designed to encourage consumer expenditure, prompting numerous analysts to wonder if this latest “buy, buy, buy” push will prove successful this time.

Throughout history, China has implemented measures to boost internal consumption since the latter part of the 1990s, as the nation started generating surplus products beyond what it could use or ship overseas. Two main approaches have developed regarding ways to spur greater expenditure.

The initial focus is on the demand-side perspective, suggesting that as individuals’ earnings go up, so does their expenditure. Advocates of this viewpoint push for consistent increases in both individual household incomes and equitable distribution of wealth across the nation. During
China’s annual parliamentary gathering
In March, numerous suggestions emerged regarding reductions in individual income tax.

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The alternative viewpoint focuses on the supply aspect influencing consumer expenditure. It indicates that the mean disposable income for individuals in China has increased alongside economic expansion. As reported officially, the per capita disposable income in China experienced a rise of 5.3% in 2024, which corresponds closely to an overall GDP growth rate of 5%.

This perspective suggests that Chinese families possess ample financial capability for spending. The primary factor in increasing consumer expenditure is offering appealing goods and services that will motivate people to spend more freely.

Beijing has tried to tackle both viewpoints in its consumer-oriented approaches. However, in reality, these efforts frequently tilt towards supply-side measures that bypass complex restructuring needs.

The government’s recent proposal mirrors this trend. Out of 30 initiatives, only four focus on income issues, notably excluding reductions in personal income taxes or straightforward financial assistance. Nonetheless, the plan includes various features aimed at boosting consumer expenditure within the globe’s second-biggest economic market, as per specific patterns that have been recognized by Beijing.

Throughout history, China has effectively increased general consumer expenditure by concentrating on essential products. During the 1970s and early 1980s, the “three major goods”—sewing machines, bicycles, and radio sets—addressed the fundamental requirements of families transitioning out of extreme poverty.

In the 1990s, the emphasis changed to color TVs, refrigerators, and washing machines. This bolstered the nation’s manufacturing prowess and nurtured the emergence of homegrown brands like Haier and TCL. Up until just a few years back, substantial investments in automobiles and real estate fueled China’s most recent economic upsurge from the latter part of the 1990s onwards.

China is currently looking for the next major products to focus on, with recent plans indicating several possible options. One definite direction involves promoting the upgrade of household appliances and vehicles to smarter and more environmentally friendly versions, a movement that is becoming increasingly popular due to their wider accessibility.
artificial intelligence (AI)
applications and electric vehicles.

For the first time, China has emphasized AI as a major priority in its consumer spending blueprint, alongside
autonomous driving
, smart
wearables
, brain-computer interfaces,
drones
and
robotics
.

Although the current market sizes for these tech-driven goods may be limited or non-existent, their growth prospects are substantial. Back in the 1980s, color TVs were regarded as luxury items for numerous Chinese families. However, this changed dramatically over ten years, making them standard household fixtures. Similarly, mobile phones, which were initially viewed as symbols of prestige and affectionately dubbed “Big Brothers,” rapidly turned into necessities for almost all adults just a short time later.

Could China be on the verge of a new consumer spending epoch, with human-like robots becoming commonplace in households across the nation? The outcome is still unclear. Nonetheless, recent technological advancements provide optimism that Beijing’s newest strategy to boost consumer expenditure might prove successful.

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