China’s emotional economy is on the rise

Rebecca Zhou, 28, who was born in China’s Sichuan province, has a variety of Moomin goods – bags, mugs and figurines featuring white Finnish characters resembling hippos – collected over the years.

Although, by her own admission, many of these purchases may seem “childish,” “it’s (simply) nice to treat yourself to something fun, even if it’s not the most bang for your buck.”

Mr. Zhou is not alone. Data from analysts and official sources shows that Chinese consumers are increasingly spending money on products and experiences, from theme parks to jewelry, chosen for their emotional resonance rather than their utilitarian value.

But consumer impulses that were once unsurprising are now being taken seriously by China’s business leaders and policymakers.

China’s “emotional economy” was first discussed in public. pop martThe Labbu dolls appear to signal a shift in consumer behavior in China, where a consumer group once characterized by norms of frugality and realism appears equally willing to splurge.

“People don’t just buy things,” Ashley Dudalenok, founder of digital consulting firm Chozan, told CNBC by phone. “They’re buying emotion, they’re buying identity, they’re buying a sense of connection.”

According to data from ChoZan, during the recent Lunar New Year holiday, consumers spent significantly less on traditional necessities such as celebratory food gifts (known as nianhao) and more on unconventional expenses such as travel experiences and cosmetics compared to the same period in 2023.

“The things that people used to buy, like booze and lots of nuts, were all about social obligation and tradition. Now people are buying gift boxes, they’re buying designer toys… and people don’t frown on that,” Dudalenok said.

The shift from mandatory to more discretionary spending associated with China’s biggest holiday exemplifies a broader shift in consumer norms, with Chinese consumers increasingly seeking to satisfy their desires for personal fulfillment rather than more “rational” purchases, Dudalenok said.

Beyond the Lunar New Year season, DaXue Consulting’s February report highlights tangible goods such as aromatherapy candles and cosmetics as a growth area in China’s emotional economy.

The iiMedia Research Center estimates that the value of China’s emotional economy is expected to exceed 4.5 trillion yuan ($655 billion) by 2029, nearly double the value in 2024, as Chinese consumers increasingly seek “emotional comfort and spiritual satisfaction.”

But while many commentators point to an increase in China’s emotion-driven spending, analysts are divided on what is driving this growth. The most common explanation is that emotion-based spending is a type of stress response.

Alison Malmsten, a strategy consultant at DaXue Consulting, said in an email that the traditional path to happiness in China – buying a house and a car while settling down and starting a family – is “becoming increasingly expensive.”

Consumer inflation also rose to a three-year high in February as China’s housing market slumps, which is expected to worsen in 2026, according to China’s National Bureau of Statistics.

China’s rising cost of living will also lead to a record low birth rate by 2025, increasing the sense of loneliness among many people in the country.

These combined pressures have instilled a “sense of crisis” in the average Chinese consumer, leading many to redirect their spending to things that “bring[them]joy,” Dudalenok said.

But for Bo Cheng, a senior research fellow at the Institute of East Asian Studies at the National University of Singapore, this gloom is only part of the story.

For Chen, the structural legacy of China’s one-child policy often concentrated family resources from two parents (and four grandparents) into a generation of mostly single children.

This concentration of family wealth (sometimes referred to as the “six pocket” effect) has created a class of young Chinese consumers who are materially cushioned by their families in a way that previous generations were not, and therefore have greater freedom to finance their material needs.

A 2021 study found that intergenerational income persistence in China, a measure of how the socio-economic well-being of parents has influenced the socio-economic well-being of their children, has increased since 1979, especially in China’s urban population.

Another study of homebuyers in Shanghai found that even those with large personal savings rely heavily on their parents’ help to finance their purchases.

Such studies lend credence to Chen’s argument that young Chinese consumers, one of the largest groups in China’s emotional economy, are on average increasingly relieved from the economic pressures of their ancestors.

“This generation…doesn’t have to worry as much about their lives,” Chen said in a phone call with CNBC.

Other macroeconomic trends, such as the improved quality of China’s industrial products, are lengthening the replacement cycle for non-discretionary and high-value items for the average Chinese consumer, freeing up capital for other expenditures.

With China’s entertainment sector thriving, Chinese consumers also have an incentive to spend money on entertainment like “Haha 2,” Chen said. The film is the second in a record-setting Chinese film series that became the world’s highest-grossing animated film last year.

A characteristic of China’s emotional economy is that the economy is growing against the backdrop of a slowdown in personal consumption.

Personal consumption in China in 2025 will increase by 2.3% from the previous year, slowing down from 5.2% in 2024 and 9.9% in 2023.

The People’s Bank of China survey also showed that for the fourth quarter of 2025, although interest in purchasing big-ticket items did not reach pre-pandemic levels, the proportion of respondents willing to spend more on social and entertainment activities in the following three months reached an eight-year high over the same period.

Similarly, in the US, overall consumption remains strong, with paid experiences accounting for an increasing share of consumer spending, with quarter-over-quarter growth of 0.5% to 0.9%. Therefore, unlike in China, spending on emotional economy experiences in the United States is in step with, rather than competing with, broader consumer spending.

This divergence has been noted by policymakers seeking to stimulate consumer demand. For example, the Chongqing municipal government emphasized the role of the municipality’s emotional economy for the first time in its 2026 work report.

Companies in China are also starting to “rethink their value proposition,” according to DaXue’s Malmsten, and many are considering how they can lean into this emotion-driven spending trend.

It capitalizes on the sense that consumers want more.

“Personally, when I buy these ‘childish’ items, I feel like I’m back in my childhood,” Zhou said. “It’s a safe, nostalgic way to return to adulthood.”

—CNBC’s Anniek Bao contributed to this report.