CGS has released a research report stating that the consumption sector should focus on the medium-to-long-term goals outlined in the "15th Five-Year Plan," while also paying attention to the implementation of specific policies targeting 2026. The firm holds an optimistic view on the overseas business development of the consumption sector in 2026.
Significant changes are expected in service consumption by 2026. Compared to goods consumption, service consumption is anticipated to show stronger improvement, supported by recent policies that emphasize its importance. Notably, removing unreasonable restrictions in the consumption sector is seen as an effective way to unleash service consumption demand, with gradual results expected.
Key takeaways from the Central Economic Work Conference held on December 10-11, 2025, in Beijing include: - Strengthening domestic demand and building a robust domestic market. - Implementing measures to boost consumption and increase urban and rural residents' income. - Expanding the supply of high-quality goods and services. - Optimizing policies for "two new" initiatives (new urbanization and new infrastructure). - Removing unreasonable restrictions to unlock service consumption potential.
### Policy Efforts to Revitalize Consumption 1) **Subsidy Policies**: Due to insufficient purchasing power in China's consumer market, government subsidies have been a quick stimulus. Since July 2024, policies have intensified, with the National Development and Reform Commission and the Ministry of Finance allocating RMB 150 billion in ultra-long-term special bonds to support trade-in programs for consumer goods. In 2025, an additional RMB 300 billion was allocated for the same purpose. While subsidies have shown some impact, their gradual phase-out poses challenges. Retail sales in October 2025 grew 2.9% YoY, down 0.1 percentage points from the previous month. The Central Economic Work Conference acknowledged the role of trade-in subsidies and suggested further optimization in 2026, potentially reducing support for already subsidized categories while introducing new ones.
2) **Policy Momentum**: The December 2024 Central Economic Work Conference prioritized consumption revitalization for 2025, leading to a series of policies: - March 2025: The "Action Plan to Boost Consumption" outlined 30 key tasks across eight areas. - April 2025: Tax refunds for overseas tourists were expanded to allow instant refunds upon purchase. - September 2025: Policies to stimulate sports consumption and promote high-quality development in the sports industry were introduced.
3) **15th Five-Year Plan**: The October 2025 proposal elevated the consumption sector to a strategic level, emphasizing: - Enhancing residents' consumption capacity and expanding high-quality supply. - Increasing the consumption rate and strengthening domestic demand as a key growth driver. - By November, six ministries outlined plans to optimize supply-demand alignment by 2027, targeting three trillion-yuan consumption sectors and ten billion-yuan consumption hotspots, with further goals set for 2030.
### Investment Recommendations: - Focus on high-dividend companies and those with alpha potential in sub-sectors. - **New Consumption**: Recommend Guming and Damai Entertainment. - **Food & Beverage**: Recommend Guoquan, Dongpeng Beverage, and Anjoy Food. - **Agriculture**: Recommend Zhong Pet. - **Apparel**: Monitor Anta Sports and Xtep International. - **Tech Consumption**: Recommend TCL Electronics (H), Hisense Visual, Ugreen, and Roborock. - **Home Appliances (High Dividend)**: Recommend Midea Group and Haier Smart Home. - **Light Industry**: Recommend ORG Packaging and monitor Yueyi.
### Risks: - Phase-out of government subsidies. - Weak consumer demand. - Market competition risks.
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