China Shifts Stimulus Focus to Services After Winter Economy Boom

2026-02-16 global

Beijing, Monday, 16 February 2026.
Policymakers pivot to services, backed by 62.5 billion yuan in subsidies, attempting to replicate the winter economy’s success to counter weak domestic demand and diversify growth drivers.

From Slopes to Spending: The Services Blueprint

Chinese policymakers are betting that the economic vitality observed in Chongli—a district transformed by the 2022 Olympics—can be scaled nationwide. Following a policy signal on January 20, 2026, Beijing is redirecting stimulus efforts from traditional heavy infrastructure toward the services sector [1]. The logic is rooted in tangible success: the “ice and snow” economy, encompassing resorts, equipment, and hospitality, is projected to surge by 50% from 1 trillion yuan in 2025 to 1.5 trillion yuan by 2030 [1]. This boom has already reshaped local livelihoods, with ski instructors like student Yan Jingyi earning over 10,000 yuan monthly and taxi drivers reporting higher incomes than they previously earned in logistics [1].

Broadening the Scope: Subsidies and Consumption

To catalyze this shift beyond winter sports, the central government launched the “Happy Shopping Spring Festival” campaign on Sunday, February 15, coinciding with the start of the holiday period [8]. This initiative is backed by 62.5 billion yuan in national subsidy funds designed to stimulate immediate consumption through trade-in programs [8]. The subsidies target specific consumer upgrades, offering a 15% discount on smart devices such as tablets and watches priced under 6,000 yuan, alongside significant incentives for home appliances and automobiles [8]. Early data from the travel sector suggests this demand exists; domestic flight bookings for the 2026 Spring Festival have risen by 63% compared to the previous year, with travelers increasingly seeking immersive experiences rather than simple sightseeing [7].

The Macro Challenge: A Two-Speed Reality

However, this pivot to consumption comes as the broader economy faces significant headwinds. Financial data released for January 2026 underscores the urgency of the stimulus: Chinese banks extended 4.71 trillion yuan in new loans, a figure that missed market expectations of 5.0 trillion yuan and fell short of the 5.13 trillion yuan recorded a year earlier [6]. This credit contraction reflects what analysts describe as a “two-speed economy,” where emerging sectors like electric vehicles expand rapidly while traditional engines, particularly real estate, continue to drag on growth [3]. Consequently, while GDP stabilized at 5% in 2025, projections from AMRO indicate a moderation to 4.6% in 2026 [3].

Risks of the ‘Build It’ Approach

The transition to a service-led model is fraught with execution risks. Analysts warn that applying the state’s traditional “build it and they will come” infrastructure playbook to the services sector could lead to overcapacity and wasteful spending [1]. Currently, China’s per-capita services consumption stands at 46.1%, significantly lower than the 70% observed in the United States, highlighting the gap policymakers aim to close [1]. President Xi Jinping has emphasized the need to leverage China’s “super-large-scale market” to anchor growth [2], a theme expected to dominate the annual parliament meeting beginning March 5 [1]. As markets remain closed for the Lunar New Year through February 23 [4], the efficacy of these new measures in bridging the gap between industrial might and household spending remains the critical economic narrative of the year.

Sources

China economy services sector