From Scarcity to Abundance to Emotion: Forty Years of Chinese Consumption
A structural history of forty years of Chinese consumption, from scarcity and abundance to emotional value.
Author | Zhao Bo
Editor | Zhang Yuwei Layout | Wang Hai
Foreword: This is the sixth article in the Profile of China’s Consumer Goods Market series. Its purpose is to analyze forty years of economic indicators and consumption-structure data since China’s Reform and Opening-Up, and to examine how consumption has moved from scarcity to abundance, and how purchasing power and consumer attitudes have transformed along the way. Over the forty years of Reform and Opening-Up, the consumption of ordinary Chinese people has changed dramatically. This process has not only accompanied economic growth but has also profoundly reflected the improvement in people’s quality of life. We begin with a comparison of key economic indicators and consumption-structure data to see how the growth in ordinary consumers’ purchasing power has reshaped their consumption attitudes. Economic Growth and Rising Consumption Capacity. According to National Bureau of Statistics data, over the past 40 years China’s total GDP has grown 58-fold and per-capita PPP has grown 54-fold. This growth has significantly boosted household purchasing power, and especially after China joined the WTO in 2001, consumption entered a phase of rapid upgrading.
In 1978, the Engel coefficient for China’s urban residents was 57.5%, and as high as 67.7% for rural residents, showing that food dominated household spending. By 2020, the urban and rural Engel coefficients had fallen to 29.2% and 32.7% respectively, showing that the consumption structure was shifting from a survival-oriented pattern to a development-oriented one.
As incomes rose, consumers were not only able to buy more goods, but also began demanding higher quality, stronger brands, and better experiences from products.
This stage of consumption upgrading was especially visible in the fast-moving consumer goods (FMCG) sector. Consumers became increasingly willing to pay a premium for high-quality, high-value-added products. This provided strong momentum for the sustained growth of the FMCG industry, and today’s leading FMCG brands are precisely the ones that grew rapidly during this period.
The Engel Coefficient. According to National Bureau of Statistics data, the Engel coefficient for China’s urban residents fell from 57.5% in 1978 to 29.2% in 2020, while for rural residents it fell from 67.7% to 32.7%. This sustained decline marks a shift in the consumption structure from a subsistence pattern to a quality-oriented one. Specifically, after 2013, spending on services grew faster than spending on goods; the share of spending on education, culture and entertainment, and healthcare kept rising, reaching 12.7% for education, culture and entertainment and 9.3% for healthcare in 2024. This continued growth in the share of spending on education, culture and entertainment, and healthcare reflects residents’ pursuit of a higher-quality life. Going forward, as income levels rise further and consumption attitudes continue to change, service consumption will remain an important force driving consumption upgrading. Stages in the Upgrading of Consumption Capacity. 1. 1984–2000: The Spread of Necessities. The number of color televisions per 100 urban households rose from 17.2 to 116.6; the share of food in rural residents’ spending fell from 67.7% to 49.1%. This was the starting phase of China’s consumption market, when household consumption was mainly aimed at meeting basic living needs, and the spread of fast-moving consumer goods was the defining feature of the period.
At the same time, the decline in food’s share of spending reflected an improvement in rural residents’ consumption structure. As incomes rose, rural residents began directing more of their income toward non-food spending such as appliances and clothing. 2. 2001–2015: The Upgrading of Durable Goods. Car ownership rose from 16.09 million to 172 million vehicles; online retail transaction value rose from zero to RMB 3.88 trillion. As household income levels rose further, consumer demand shifted from necessities to durable goods, and the spread of durables such as cars and appliances became the defining feature of this period. Taobao was founded in 2003, marking the beginning of China’s e-commerce era. By 2015, China’s online retail transaction value had reached RMB 3.88 trillion, or 12.6% of total retail sales of consumer goods. E-commerce platforms led by Alibaba completely transformed consumers’ shopping habits. 3. 2016–2024: The Boom in Service Consumption. Per-capita spending on education, culture, and entertainment grew 178%; healthcare’s share of spending passed 10%. In this stage, consumer demand shifted from the material to the service level, with education, culture and entertainment, and healthcare becoming new growth drivers. From 1984 to 2024, the core driver of China’s consumer market moved from necessities to durable goods and then to service consumption. In 2024 in particular, service consumption exceeded 45% of total consumption spending, showing the maturing and diversification of consumer demand. Structural Challenges and Trends. 1. The Urban-Rural Divide. In 2024, urban residents’ per-capita consumption spending was 2.3 times that of rural residents, and the gap in service consumption was as high as 2.8 times. However, as internet access spread, online-shopping penetration in rural areas rose from 17% in 2015 to 68% in 2024. This shows the enormous potential of lower-tier markets — even as the urban-rural gap persists, the rise of the internet and e-commerce platforms is narrowing it. 2. The Rise of New Consumption Formats. In 2024, livestream e-commerce GMV surpassed RMB 5 trillion, while the silver economy reached RMB 12 trillion in scale. These emerging consumption formats reflect the increasing refinement and personalization of consumer demand, showing deep fragmentation of consumption scenarios, especially in livestream e-commerce and consumption tied to an aging society. The Shift in Consumption Attitudes. Against a backdrop of sustained economic growth, consumer demand has gradually shifted from meeting basic survival needs toward the pursuit of quality and diversity. 1. Consumption Is Shifting from Material Goods to Services.
Education spending: Parents’ emphasis on their children’s education has driven rapid growth in education spending. In 2020, online education platforms such as Yuanfudao and Zuoyebang saw user numbers surge, and their valuations climbed accordingly.
Culture and entertainment spending: Spending on films, travel, and other cultural and entertainment activities has kept growing. In 2019, China’s box office topped RMB 64 billion, making it the world’s second-largest film market.
Healthcare spending: The arrival of an aging society and rising health awareness among residents have driven rapid growth in healthcare spending. In 2020, Ping An Good Doctor’s full-year revenue reached RMB 6.87 billion, up 35.5% year on year.
Consumer demand is shifting from physical products to service experiences, and service consumption has become a new growth driver.
2. Consumption Is Shifting from Offline to an Online-Offline Fusion.
The Rise of E-Commerce Platforms: Taobao was founded in 2003, marking the beginning of China’s e-commerce era. By 2024, China’s online retail transaction value had surpassed RMB 15.5225 trillion, accounting for 26.8% of total retail sales of consumer goods.
The Boom in Livestream E-Commerce: According to iiMedia Research data, China’s livestream e-commerce market was projected to reach RMB 1.9083 trillion in scale in 2024. Livestreamers such as Li Jiaqi have become phenomenal public figures.
The Rise of New Retail Models: A variety of new retail models have emerged, using online-offline integration to give consumers a more convenient shopping experience — for example, Hema (Freshippo) and Shandian Cang (instant-retail “flash warehouses”).
3. Consumer Behavior Is Shifting from Herd Imitation to Personalized Experience. As consumption attitudes have changed, consumers have paid increasing attention to personalization and experience, and customized, differentiated products have become a market trend. Consumption Attitudes in the Age of Scarcity (from the Early Reform Era to the End of the 20th Century). In the early years of China’s Reform and Opening-Up, the economic base was weak and material resources were scarce, so household consumption was concentrated mainly on meeting basic survival needs. According to National Bureau of Statistics data, per-capita disposable income nationwide was only RMB 171 in 1978, and the Engel coefficient was as high as 57.5%, showing that food accounted for a large share of household spending and that the consumption structure was overwhelmingly survival-oriented. 1. The Definition and Manifestations of Scarcity. Material scarcity: consumers had limited choices, products were valued mainly for their functionality, and demand was concentrated on survival and basic necessities. The Engel coefficient: a high share of household spending on food reflected a weak economic base and everyday consumption weighted toward basic living needs. 2. How the Sense of Scarcity Shaped Consumer Behavior. A thrift-and-reserve mentality: in an unstable economic environment, consumers tended to save and economize, and consumption skewed conservative. Limited choice and price sensitivity: with few product varieties on the market, consumers focused on value for money and practicality. Collective consumption: because goods were scarce, collective consumption became common, giving rise to practices such as bulk purchasing and cooperative consumption. 3. Consumption Phenomena of the Scarcity Era. Restrictions on consumption under the planned economy: market supply was limited, consumers could only choose among a narrow range of goods, and brand awareness was low. Price-driven consumption decisions: consumers valued a product’s basic functionality, and price was often the deciding factor in consumption. Survival-oriented consumption: consumer behavior centered mainly on meeting basic survival needs such as food, clothing, and appliances. In sum, in the early years of Reform and Opening-Up, China’s consumption was concentrated on meeting basic survival needs, the consumption structure was overwhelmingly survival-oriented, and consumer behavior was constrained by material scarcity and economic conditions. As the economy developed, the consumption structure gradually shifted toward development-oriented consumption, and consumer needs and behavior underwent profound change.
Consumption Phenomena in the Age of Abundance (from the Early 21st Century to Today). Entering the 21st century, China’s economy kept growing and household income levels rose markedly, producing a profound change in the consumption structure. According to National Bureau of Statistics data, the Engel coefficient for China’s urban households had fallen to 29.2% by 2020, a decline sustained over many years that reflects the upgrading of the household consumption structure. 1. The Definition and Manifestations of Abundance. Material abundance: consumers have diverse choices, product functionality and quality become the focus of attention, and demand shifts from survival-oriented to development-oriented. The Engel coefficient: a lower share of household spending on food reflects economic development, with everyday consumption weighted toward quality and diversity. 2. How the Sense of Abundance Shapes Consumer Behavior. Quality and brand awareness: consumers pay more attention to product quality and brand value, and are willing to pay a premium for high quality and strong brands. Personalized and experiential consumption: consumers pursue personalization and unique experiences, and demand for customized products and services rises. Online-offline integration: online shopping combines with offline experience to form an omnichannel consumption model. 3. Consumption Phenomena of the Abundance Era. Upgrading of service consumption: the share of service consumption such as education, culture and entertainment, and healthcare keeps rising, satisfying residents’ pursuit of a higher-quality life. Growth of high-end consumption: demand for high-end goods and services such as luxury items, travel, and health increases, reflecting the trend of consumption upgrading. Digital consumption: the development of internet technology has given rise to new consumption models such as e-commerce and livestream selling, and online shopping has become mainstream. A Comparative Analysis of Scarcity and Abundance Consumption Phenomena. As China’s economy has developed rapidly, the consumption structure has moved from scarcity to abundance. This shift is reflected not only in material abundance, but has also had a profound impact on consumer behavior, psychology, and social culture. 1. The Shift in Consumer Behavior. From survival-oriented to development-oriented consumption: in the scarcity era, consumers focused mainly on meeting basic survival needs such as food, clothing, and housing. In the abundance era, as income levels rose, consumers began pursuing quality and diverse products and services, and consumption demand shifted from survival-oriented to development-oriented. From frugality to hedonism: in the scarcity era, frugality was the dominant consumption attitude, and consumers tended to save and avoid unnecessary spending. In the abundance era, hedonism has gradually emerged, and consumers are more willing to spend to improve their quality of life and enjoy experiences. 2. Changes in Consumer Psychology. From a scarcity mindset to an abundance mindset: in the scarcity era, consumers often faced limited resources and displayed a frugal, cautious consumption psychology. In the abundance era, as resources have become more plentiful, consumers’ mindsets have relaxed, and they are more willing to try new things and enjoy life. From short-termism to long-term planning: under scarcity, consumers, constrained by limited resources, may act with a short-term outlook focused on immediate needs. Under abundance, consumers have more capacity for long-term financial planning and investment.
3. The Evolution of the Consumption Structure. From material consumption to service consumption: in the scarcity era, consumption was concentrated mainly on physical goods such as food and clothing. In the abundance era, the share of service consumption — education, healthcare, travel, entertainment, and the like — has gradually risen, reflecting the upgrading of the consumption structure. From singular to diversified needs: in the scarcity era, consumer needs were relatively singular, mainly aimed at meeting basic living needs. In the abundance era, consumer needs have diversified, with consumers pursuing personalized, high-quality products and services. 4. The Influence of Social Culture. From collectivism to individualism: in the scarcity era, collectivism prevailed, and consumption behavior was shaped mainly by social norms and collective needs. In the abundance era, individualism has risen, and consumers pay more attention to personal preference and self-expression. From material pursuit to spiritual pursuit: in the scarcity era, material satisfaction was the primary goal. In the abundance era, as material needs are met, consumers have begun to pay attention to spiritual needs such as culture, art, and emotional experience. The Post-Abundance Era: The Focus on Emotional Consumption and Value for Money. As China’s economy has continued to develop and household income levels have risen, the consumption structure has shifted from survival-oriented to development-oriented. However, entering the post-abundance era, consumers’ focus has gradually shifted from purely material satisfaction toward a balance between emotional experience and value for money. 1. The Rise of Emotional Consumption. Emotion-driven purchasing behavior: in the post-abundance era, consumers’ purchasing decisions are increasingly influenced by emotional factors. For example, negative emotions such as loneliness and anxiety may prompt individuals toward compensatory consumption in search of psychological comfort. Research shows that loneliness makes consumers more inclined toward compensatory consumption behavior to relieve inner unease and loneliness. For more, see In the Coming Age of Loneliness, Emotional Consumption Will Explode. Diverse forms of emotional consumption: emotional consumption is not limited to purchases of physical products — it also includes demand for services and experiences such as travel, entertainment, and health management. This behavior reflects consumers’ desire for emotional connection and psychological satisfaction. 2. The Focus on Value for Money. A rational assessment of value for money: against a backdrop of material abundance, consumers evaluate the value for money of products and services more rationally. They weigh not only quality and functionality but also price, in order to achieve the best value exchange. For more, see In an Abundant Society, Consumers Need Value for Money and Emotional Value Even More. Balancing brand and value: while pursuing high quality, consumers also pay attention to a brand’s expression of value. They tend to favor brands that can deliver emotional value and satisfy psychological needs, even when those brands are relatively expensive. 3. The Diversification of Consumer Behavior. Demand for personalization and customization: consumers are increasingly seeking products and services that match their personal preferences and needs. Customized, personalized consumption experiences have become an important direction of market competition. The rise of the experience economy: consumers pay more attention to the experience and feelings involved in the consumption process, and are willing to pay a premium for a unique experience. This is pushing companies to place greater emphasis on user experience and the creation of emotional value in product and service design. 4. The Influence of Social Culture. Social media and consumer behavior: the spread of social media has made consumers’ emotions and consumption behavior more public and transparent. Consumers share their consumption experiences on social platforms, influencing others’ purchasing decisions, while also being influenced by others’ reviews. Shifting cultural values: as society develops, consumer values are changing — alongside the pursuit of material satisfaction, consumers are placing greater emphasis on spiritual needs such as self-actualization and social responsibility. In sum, consumer behavior in the post-abundance era displays the dual characteristics of emotional consumption and a focus on value for money. When formulating marketing strategies, companies need to deeply understand both consumers’ emotional needs and their rational considerations, and offer products and services that satisfy emotional needs while also delivering strong value for money, in order to win consumers’ favor.
Conclusion. China’s consumer market has undergone a profound transformation from scarcity to abundance, and consumer behavior and the consumption structure have changed markedly. In the post-abundance era, emotional consumption and a focus on value for money have become new consumption trends. However, recent changes in the economic environment — such as the downturn in the real estate market and the impact of the pandemic — have weakened consumer confidence and dampened the willingness to spend. For example, media reports in December 2024 noted that consumers had become more cautious when shopping, tending to economize and cut back on non-essential spending. Facing these challenges, government and businesses need to take effective measures to boost consumer confidence and drive consumption growth. This includes offering more consumption-stimulus policies, improving consumers’ economic expectations, and meeting consumers’ increasingly diverse and personalized needs through innovation and improvements in product and service quality. In sum, the development of China’s consumer market reflects the profound impact of economic growth and social change on consumer behavior. Going forward, as the economic environment continues to change, consumer behavior may show new trends and characteristics that call for ongoing attention and research.