Young Chinese Consumers Turn to Emotional Spending Amid Economic Slowdown
Beijing, Saturday, 28 June 2025.
Amid economic slowdown, young Chinese consumers increasingly indulge in emotional spending, focusing on small luxuries like milk tea and collectibles. This behavior shift highlights the link between spending and emotional well-being, impacting market dynamics in China.
The Rise of Emotional Spending
Amidst China’s economic slowdown, which saw a notable decrease in GDP growth compared to the double-digit expansion rates of the previous decades, young Chinese consumers are turning to ‘emotional spending.’ This trend reflects a shift from investing in significant assets like homes and cars towards small indulgences that provide instant gratification, such as milk tea and collectibles like Labubu figurines. These changes are not only a response to personal financial constraints but also to broader economic pressures, such as the ongoing U.S.-China trade tensions [1][2].
Impact on Consumer Industries
Industries such as films and gaming have benefitted significantly from this trend, experiencing an average annual growth of about 12% since 2013. This shift towards emotional consumption has also propelled the beverage sector, with chains like Mixue expanding to more than 45,000 locations worldwide, outnumbering established giants like McDonald’s and Starbucks. The focus has moved from high-end luxury items to goods and experiences that offer emotional comfort in challenging economic times [1][3].
Current Economic Context
The Chinese economy in 2025 continues to experience a higher youth unemployment rate, around 15%, leading to fierce job competition. With the addition of over 12 million university graduates this year, the pressure on young individuals is immense. This economic strain is compounded by a slower GDP growth rate and the persistent effects of the U.S.-China trade war, further influencing purchasing patterns among young consumers [1][2].
Future Market Implications
Understanding the motivations behind this shift in consumer behavior is crucial for businesses operating within or trading with China. Emotional spending patterns can provide insights for strategic planning, allowing companies to align their products and services with the desires and challenges faced by young Chinese consumers. As the market for emotional consumption is projected to exceed $270 billion in 2025, businesses must consider these dynamics when planning for the future [1][2][3].