China is taking another step to boost domestic consumption and stimulate economic vitality through innovation. The Ministry of Finance and the Ministry of Commerce have jointly issued the Notice on Carrying Out Pilot Work on New Consumption Formats, New Models, and New Scenarios, which outlines a comprehensive plan to develop innovative consumption ecosystems across the country. The initiative, which will run for two years, is designed to expand high-quality consumption supply, accelerate service-sector growth, and strengthen domestic demand through a coordinated policy approach.
Strengthening Domestic Demand Through Consumption Innovation
Boosting consumption has become a central theme in China’s 2025 economic agenda. Consumption remains a critical pillar for both economic stability and livelihood improvement, and the government aims to transform it into a more dynamic driver of high-quality development. Following the direction set by the Party Central Committee and the State Council, the new pilot program reflects a series of decisions taken over the past year, including the Special Action Plan for Boosting Consumption, which emphasizes innovation, service consumption, and new economic growth points.
China’s expanding transportation infrastructure, growing urban networks, and evolving consumer behavior have created favorable conditions for this initiative. The emergence of new technologies, creative business models, and cross-sector integration has led to new consumer patterns. However, despite this progress, traditional consumption structures still struggle to meet the increasingly diverse and personalized needs of residents. The new pilot program seeks to close this gap by enhancing supply quality, encouraging innovation, and creating more varied consumption scenarios.
Focus Areas: Formats, Models, and Scenarios
The pilot initiative will be rolled out in approximately 50 cities across China, including municipalities, provincial capitals, and other key prefecture-level cities. These cities will serve as testing grounds for three major areas of innovation.
The first focus is the development of a “first economy” service ecosystem. Cities will establish launch centers, innovation clusters, and product debut platforms that attract both domestic and international brands. These spaces will support first stores, flagship stores, and concept stores, fostering an environment for brand showcases and product launches.
The second area emphasizes the creation of diversified service consumption scenarios. Pilot cities will be encouraged to integrate business, tourism, culture, sports, and wellness to generate new forms of experiential consumption. Initiatives such as night-time cultural events, themed tourism hubs, and high-quality product exhibition centers will strengthen consumer engagement and stimulate spending.
The third area supports the cross-border collaboration of high-quality consumer resources and intellectual property. By linking domestic brands with popular IPs, from animation to traditional culture, cities will develop immersive retail spaces and themed experiences. The aim is to elevate China’s creative consumer industries, nurture new leading brands, and revitalize long-standing enterprises.
Policy Design and Expected Economic Impact
The pilot program is structured to address two key challenges: improving supply quality and stimulating consumer innovation. It aims to unlock new sources of demand through innovation, demonstration, and employment generation.
From a supply perspective, the policy encourages cities to deliver more diverse, immersive, and high-quality consumption experiences. The creation of innovative consumption spaces will help better meet the evolving preferences of China’s growing middle class.
The initiative also prioritizes demonstration and guidance. By cultivating new growth points for service consumption, the pilot cities are expected to set examples for nationwide replication. Successful practices in service innovation, technology integration, and consumer engagement will be promoted across other regions.
A further anticipated outcome is job creation. As new consumption sectors expand, particularly those involving services, retail, culture, and tourism, they are expected to create a large number of employment opportunities, reinforcing the service industry’s role as a major absorber of labor.
Selection and Evaluation of Pilot Cities
The Ministry of Finance and the Ministry of Commerce have adopted a competitive review process to select the pilot cities. Each province may nominate up to two cities, while major consumer provinces can nominate three. Cities under direct central administration and those with independent planning status will apply separately.
The review process will assess each city’s consumer market foundation, business environment, governance capacity, and potential for consumption-driven growth. Once selected, pilot cities will receive central government subsidies, issued in two stages. The initial funds will support early-stage projects, while subsequent disbursements will be linked to performance evaluations.
To ensure accountability, performance evaluations will be conducted twice; midway through 2026 and at the end of the pilot period. The assessments will be carried out jointly by the provincial authorities, the Ministry of Commerce, and the Ministry of Finance, with third-party organizations involved to ensure transparency and objectivity.
Implementation, Oversight, and Transparency
The effectiveness of the pilot will depend on strong coordination, transparent management, and disciplined use of funds. The “Notice” explicitly prohibits the use of central subsidies for infrastructure expansion, land development, or administrative expenses. Funds must be directed exclusively toward eligible projects that advance new consumption initiatives.
Local governments will play a central role in execution. Pilot cities are required to establish coordination mechanisms, strengthen supervision, and ensure proper fund utilization. The Ministry of Finance and the Ministry of Commerce will oversee implementation to prevent misuse of funds and promote efficient spending.
The program also emphasizes communication and public engagement. Provincial and municipal departments are expected to use various media platforms to raise awareness about the policy, highlight local innovation cases, and promote successful models. The goal is to create a multiplier effect, where local pilots inspire broader reforms and stimulate nationwide participation in the development of new consumption ecosystems.
A Strategic Step Toward a More Dynamic Consumption Economy
The pilot program on new consumption formats, models, and scenarios marks a significant step in China’s long-term strategy to transform its consumption structure and stimulate domestic demand. By encouraging innovation, enhancing supply quality, and supporting creative business models, the initiative seeks to unlock new sources of economic growth while meeting the evolving needs of China’s consumers.
Over the next two years, the selected pilot cities will play a crucial role in testing and refining policies that could shape the future of China’s consumer economy. As these pilots take root, they are expected to foster stronger linkages between industries, create new employment opportunities, and strengthen the resilience of China’s domestic market, laying the foundation for sustainable, innovation-driven growth.