Introduction to China’s Consumer Spending Trends
As the year gets underway, consumer spending trends are starting to emerge within the experiences economy, and stock analysts are picking out the names they expect to be winners. According to Charlie Chen, head of research at China Construction Bank International Securities, while the consumer staples sector likely doesn’t have much room to run this year, there are more opportunities in discretionary and services spending — such as food and beverage. Chen noted that services-heavy sectors also help support employment, in line with government goals, and local authorities may release more vouchers to spur regional tourism.
Analysis of Consumer Spending Sectors
China’s goods retail sales grew by 4% in 2025 as of November, while that of services rose by a slightly faster 5.4%. Full-year figures are due out Jan. 19. Bank of America goes beyond the sector approach to comparing Chinese retail plays to convertible bonds. “While consumer growth has been muted in general, most leading consumer companies still enjoy strong net cash positions and cashflow generation,” the BofA analysts said in a Jan. 6 report. The analysts predict that many consumer stocks now enjoy 4-6% dividend yields, which can offer some downside protection.
Favorite Consumer Stocks
Bank of America’s two favorite China consumer stocks are hotel chain operator H World, for growth, and KFC operator Yum China, for yields. The analysts rate H World’s U.S.-listed shares as buy, with a price target of $62. They predict revenue per available room will turn positive this year with 2% growth, reversing an estimated 2% decline in 2025. As for Yum China, which also runs Pizza Hut in China, BofA has a price target of $56.50 and a buy rating. China Construction Bank International also lists Yum China as one of its favorite consumer services stock picks for the year, given the company’s “excellent execution” and “strong bargaining power.”
Support from China’s Extended Trade-in Policy
Stock analysts also still see some support from China’s extended trade-in policy announced in late December. The measures expand purchase subsidies to AI glasses and certain smart home products, while narrowing the range of eligible appliances. The “trade-in program favors white goods,” HSBC analysts said in a report Thursday. One of their preferred China consumer picks is Hong Kong-listed appliance company Midea. “In 2026, we remain positive on Midea given its solid earnings growth and high-quality shareholder returns,” the analysts said.
Conclusion and Reference
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Smart Tip for Readers
When considering investments in the consumer sector, it’s essential to research and understand the company’s financial health, growth prospects, and competitive advantages to make informed decisions. Always consult with a financial advisor or conduct your own research before making investment choices.
