AT LAST CHINA’s government wants to ramp up domestic consumption. So far, there’s not much to show for it. Figures released on January 19th showed that GDP grew by 5% in 2025, driven by buoyant exports. At about 4.2%, household consumption growth lagged GDP. “Who is actually still spending money?” asks a headline on a Chinese news site. The article shows a chart that has gone viral: Chinese provinces categorised into those that “dare” to consume, and those that are “happy”, “cautious” or “afraid” to do so, it suggests.
It is true that spending habits differ vastly between regions. Heilongjiang, a frigid province in the north, has an average disposable income of 31,000 yuan ($4,453) per person and 75% of it is frittered away; people in snowy Tibet to the west make a similar amount, but just 61% of it is spent. Classifying regions into spendthrifts and misers is an attractive idea, especially since it could light the way for policies to lift consumer spending. To do that it is crucial to know what explains the differences and what could “vigorously boost consumption”, and where.
The Economist has made such an attempt. We first look at people’s willingness to splash out in each region. Chart 1 plots the share of income consumed against income. It shows an expected relationship: the more a province brings in, the less it spends as a proportion. What’s interesting, though, are deviations from that trend. Folk in Guangdong province consume 70% of their income, three percentage points more than if they had conformed to the trend. Accounting for its size, that means Guangdong contributes 174bn yuan more to national consumption than might be expected. Inhabitants of Shandong province spend underwhelmingly. They are to blame for dragging down national consumption by 327bn yuan.
More pertinent, though, is what happens at the margins: how consumption varies in response to changes in income. Chart 2 plots this for the years 2023 to 2024, the latest available data. By this measure, Zhejiang, a coastal province, has been doing the heavy lifting for national consumption: of the 3,200-yuan increase in average income in 2024, it spent 2,900. The cosmopolitan Shanghainese, geographically just above Zhejiang, were relatively stingy. They gained 3,500 yuan in income, but then only consumed 200 yuan more. Guangdong and Shandong, previously the spending leader and laggard respectively, are both close to trend.
What determines this marginal zeal for splashing cash? The data suggest several factors are important. The higher the initial income, the lower the enthusiasm to consume any extra dollops of it. That makes sense—the wealthy Shanghainese already shell out a whopping 53,000 yuan each year on average. It follows that more urban provinces, with cities full of well-heeled types, also seem less inclined to fritter away extra income.
Other factors also matter. If a province contains many residents enrolled in unemployment insurance, marginal spending seems more appealing to them. Meanwhile, places with high dependency ratios—where each working adult has many other people to support—understandably see a lower propensity for extra splurging.
Our tentative analysis suggests where the Chinese authorities should focus to boost consumption: places where income levels are low and the share of the provincial population living in the countryside is high. It also supports other interventions, such as strengthening the social safety-net and easing the financial burdens involved with caring for children and the old.
Still, all that may not be enough for China to meet its GDP growth target for 2026, which will probably be near 5% again. That will put pressure on the authorities to step in. If governments could also be categorised, China’s might need to be one that “dares” to dole out stimulus. ■
Subscribers can sign up to Drum Tower, our new weekly newsletter, to understand what the world makes of China—and what China makes of the world.