Since late September, China has launched a new round of economic stimulus measures, including interest rate cuts, LPR adjustments, reductions in existing mortgage rates to stimulate consumer market potential, and support to the stock also real estate markets. China also issued 1 trillion yuan in ultra-long-term special bonds to support consumer goods upgrades. The most groundbreaking measure is the central bank's relending program, initially set at 500 billion yuan with potential expansion to 1.5 trillion, allowing listed companies and financial institutions to use stock as collateral for financing, effectively to support the stock market.
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Post-4thQuarter Policy Focus, Economic and Market Expectations
Performance of the Shanghai Composite Index following economic stimulus in late September
According to insights shared in a recent closed-door meeting by JPMorgan, China’s economy is facing downward pressure, mainly reflected in weak domestic demand, with sluggish investment and consumption. The root causes are low prices and tightened fiscal policies. Great Wall Securities notes that as of January 2024, China’s real interest rate is at a relatively high level over the past 15 years, which may lower CPI and suppress loan demand. Multiple investment banks agree that current policy direction is focused on promoting stable growth alongside economic transformation, with fiscal policies aimed at supporting local governments, the real estate, and the stock market.
Facing the 'blockages' in domestic economic growth, renowned industry experts have called to: 1. Export-oriented enterprises should focus more resources and efforts on the 'international circulation' to find new growth breakthroughs; 2. The three main issues limiting Chinese residents' consumption capacity—education, healthcare, and housing, which occupy a large share of expenses—must be alleviated to effectively increase consumer willingness, thereby driving economic growth; 3. The stock market may replace real estate in playing a significant role. If housing prices drop by 30%, the government should intervene to stabilize the market, including purchasing existing housing stock. In mid-October, the Minister of Housing and Urban-Rural Development stated that China’s real estate market has begun to bottom out, signaling a potential recovery.
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The New Wave of Overseas Expansion and the Rise of Borderless Enterprises
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Trends in the Cultural and Tourism Consumption Sector
Since mid-2023, Beijing, as an international hub for exchange and culture, has introduced measures to enhance convenience for foreign visitors, such as supporting foreign bank cards for subway payments. From January to September, Beijing saw inbound tourism recover to 82.0% of 2019 levels, with tourism foreign exchange income reaching 74.7%. Other cities, including Shanghai and Chengdu, reached peak numbers in September, showcasing immense potential in cultural and tourism consumption. This surge has also driven global social media interest, with many international influencers creating viral content under the China Travel trend.
Beijing and Shanghai 2035 Urban Master Plans, Data credit:Qianzhan research
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Findings from NIQ’s Mid-Year Consumer Outlook Guide to 2025 indicate that consumers are shifting their focus from price to value, prioritizing health, sustainability, and personalized experiences. This transition from cautious to conscious consumption will profoundly influence market strategies in 2025 and beyond. Key trends affecting consumer behavior in the future include the rise of social commerce and the application of AI technology.
In the third quarter of 2024, the Kantar Media Reactions 2.0 report on the Chinese media market revealed a significant improvement in the effectiveness of short drama advertisements and OTT platform ads. This shift has prompted advertisers from industries such as beauty, food, and electronics to reallocate budgets from traditional television to short-form content. For both domestic and foreign companies in the Chinese market, it is crucial not only to understand these trends but also to align with policy directions and innovate strategies based on social structures and consumer needs to gain a competitive edge.
Panglonglai supermarket
The upcoming U.S. elections in November may upgrade global geopolitical uncertainties, and the next few years are poised to be extraordinary. In the meantime, China’s upcoming Spring Festival consumption season is expected to account for about 40% of annual spending. Deep understanding of the local market trends and directions is critical to help business discover new opportunities and drive growth in Chinese market.
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