China’s Gen Z and Millennials Secretly Upgrading Lifestyles Amidst ‘Consumption Downgrade’ Rhetoric

For several years now, the global narrative surrounding the Chinese consumer market has been dominated by the term “消费降级” (xiāofèi jiàngjí), or “consumption downgrade.” This phrase, echoing across both domestic and international media, paints a picture of Chinese citizens tightening their belts, becoming more price-conscious, and opting for cheaper alternatives in the face of economic uncertainties and the lingering effects of the global pandemic. Images of meticulously comparing prices, hoarding coupons, and embracing “Pinduoduo” (拼多多) for its rock-bottom deals have become synonymous with the perceived shift in Chinese consumer behavior. Many observers, both inside and outside China, have concluded that the golden age of lavish spending might be over, replaced by an era of frugality and cautious budgeting.

However, a recent report from a well-regarded Chinese research institution suggests that this narrative, while containing elements of truth, might be missing a crucial piece of the puzzle. According to the “2024 Consumption Upgrade Report” released by Hou Lang Research Institute (后浪研究所), a youth-focused research arm of the prominent Chinese tech and business news platform 36Kr, a significant portion of young Chinese consumers, particularly those from the Gen Z and Millennial cohorts, are actually engaging in what can be described as “consumption upgrade” (消费升级, xiāofèi shēngjí) – albeit often discreetly and sometimes even subconsciously.

The report, based on a survey of 723 young individuals conducted in early 2025, delves into the apparent paradox of “consumption downgrade” and “consumption upgrade” coexisting in the current Chinese market. It reveals that while a majority of young people indeed acknowledge practicing “consumption downgrade” in certain aspects of their lives, a surprisingly large proportion are simultaneously increasing their spending in other areas, particularly those related to experiences, personal growth, and lifestyle enhancement.

The Illusion of Downgrade: Strategic Retreat or Genuine Austerity?

The survey kicks off with a straightforward question: “Did you consumption downgrade last year?” Unsurprisingly, a significant 51.9% of respondents answered “yes,” while another 28.1% chose “not sure.” Only 20% definitively stated they did not downgrade their consumption. This initial finding seems to reinforce the prevailing narrative of widespread frugality.

The report further explores the manifestations of this “consumption downgrade.” Over 60% of respondents indicated that they are consciously curbing their desire for high-end consumption, particularly on luxury goods and expensive electronics (3C products). When asked about specific behaviors associated with “consumption downgrade,” the top responses included:

• Buying discounted or promotional products/services: 69.7%
• Reducing consumption of luxury goods and electronics: 63.5%
• Reducing overall shopping expenditure: 58.8%
• Reducing spending on entertainment activities (KTV, cinemas etc.): 57.4%
• Reducing dining out: 53.1%
• Extending the lifespan of existing products: 51.6%

These data points paint a picture of young Chinese consumers actively seeking value for money, postponing discretionary purchases, and prioritizing necessities over luxuries. The report even summarizes the young generation’s saving ethos with three catchy phrases: “No discounts, no look! No price drops, no change! No necessity, no buy!” (非打折不看！非降价不换！非必要不买！). This seems to be a generation adept at navigating promotional offers, waiting for sales, and questioning the real need for every potential purchase.

However, the narrative takes a fascinating turn when the survey poses a seemingly contradictory question: “Did you experience consumption upgrade last year?” Astonishingly, nearly 70% of respondents answered “yes,” with only 13.8% saying “no,” and 18.5% unsure. This starkly contrasts with the earlier finding about “consumption downgrade” and suggests a more nuanced and complex reality.

The report aptly labels these young consumers as “dual-standard” (双标, shuāngbiāo), highlighting their seemingly paradoxical behavior. “Consumption downgrade” isn’t necessarily a complete retreat into austerity, but rather a “strategic retreat” (战略性撤退, zhànlüè xìng chètuì) in certain areas, allowing for a simultaneous “charge forward” (上头, shàngtóu – an internet slang term indicating impulsiveness or being carried away) in others. It’s a picture of carefully calculated frugality in some aspects of life, freeing up resources for targeted upgrades in areas that truly matter to them.

Age and Geography: Decoding the Upgrade Drivers

The survey further breaks down the “consumption upgrade” trend by age group, revealing that younger generations are more likely to be driving this shift. Nearly 80% of respondents in the 00s age group (those born in the 2000s and after, roughly Gen Z) reported experiencing consumption upgrade, compared to around 67% for 95s (mid-to-late Millennials), 64% for 90s (early Millennials), and 63% for 85s (older Millennials). This suggests that the younger cohort, perhaps less burdened by traditional notions of saving for the future or more optimistic about their economic prospects, are more inclined to indulge in “consumption upgrade.”

Geographically, the report reveals another intriguing trend. Counterintuitively, “consumption upgrade” is not solely a phenomenon of China’s megacities like Beijing and Shanghai. In fact, the survey indicates that “new first-tier cities” (新一线城市, xīnyīxiàn chéngshì), a term referring to rapidly developing and economically vibrant cities like Wuhan, Suzhou, and Changsha, are exhibiting even stronger “upgrade” momentum. The top three cities with the highest proportion of respondents reporting “consumption upgrade” were Wuhan (84.6%), Suzhou (81.8%), and Changsha (76.9%), surpassing even Shanghai (73.5%) and Beijing (72.8%).

The report playfully quotes a Wuhan resident, “We are not ‘involution kings’ (卷王, juǎn wáng – a term for someone excessively competitive and hardworking), we just use the money saved from eating re gan mian (热干面, Wuhan’s famous hot dry noodles) to go to live houses!” This anecdote highlights a potential cultural shift, suggesting that residents of these burgeoning cities may be prioritizing quality of life and experiences over relentless work and accumulation of material possessions, perhaps reflecting a different work-life balance compared to the intensely competitive environments of Beijing and Shanghai.

Experience is King: Where is the Money Going?

So, where exactly is this “upgraded” consumption being directed? The report categorizes spending into four broad areas: “experience consumption,” “personal growth,” “lifestyle,” and “hobbies.” “Experience consumption” emerges as the clear leader, with more respondents reporting upgrades in this area than any other category.

Within “experience consumption,” the top five upgrade categories are:

1. Travel: 47.4%
2. Live houses/concerts/music festivals: 24.1%
3. Outdoor activities: 23.8%
4. Watching dramas (musicals, plays): 17.3%
5. Going to the movies: 14.9%

Travel unequivocally tops the list, confirming its status as a major driver of “consumption upgrade” for young Chinese. The report jokingly uses the internet catchphrase “Youth has no price tag, take down [your travel destination]!” (青春没有售价，小小XX拿下！), reflecting the impulsive and experience-driven nature of travel spending.

Live music and performances also rank high, with the report noting the surge in nationwide tours by major artists in 2024. These events have not only revitalized the entertainment sector but have also become significant economic drivers for local economies, with some even claiming “a concert ignites a city” (一场演唱会带火一座城).

In “personal growth,” the top upgrade categories are:

1. Knowledge-based paid content (知识付费, zhīshì fùfèi): 35.3%
2. Fitness and body shaping: 33.3%
3. Work skill enhancement (e.g., programming, Photoshop): 24.5%
4. Tutoring and training (教培, jiàopéi): 10.0%
5. Psychological counseling: 5.3%

“Knowledge-based paid content” leads the way, reflecting the continuous pursuit of self-improvement and career advancement among young Chinese. From “self-taught coding” courses popular in previous years to “zero-to-hero graphic design” programs, the report highlights the rise of AI-related tutorial courses in 2024. Simultaneously, physical well-being is also a priority, with “fitness and body shaping” gaining prominence. Yoga and Pilates have emerged as popular “new middle-class internet-famous sports” (新晋中产网红运动, xīnjìn zhōngchǎn wǎnghóng yùndòng), indicating a growing awareness of health and wellness.

In “lifestyle upgrades,” the top categories are:

1. Clothing: 26.8%
2. Dining out: 26.6%
3. Coffee: 25.7%
4. Healthcare and wellness (养生, yǎngshēng): 22.7%
5. Home goods (cooking, baking): 22.4%

While spending on clothing remains a consistent area of expenditure, “dining out” and “coffee” highlight the pursuit of higher quality and more enjoyable daily experiences. Surprisingly, “healthcare and wellness” ranks fourth, indicating a growing awareness of health consciousness among younger generations entering the workforce.

Finally, in “hobby upgrades,” the top categories are:

1. Gaming: 23.9%
2. 3C electronics: 21.0%
3. Music: 14.8%
4. Pets: 14.5%
5. Photography: 13.4%

Gaming and 3C electronics continue to be significant areas of spending, particularly within their respective subcultures. The report humorously notes the gaming community’s motto: “Gaming skills can be bad, but skin purchases must not stop!” (游戏技术可以菜，皮肤氪金不能断！), highlighting the willingness to spend on in-game cosmetics and virtual items. Even when budgets are tight, the desire for the latest gadgets and upgrades remains strong. Interestingly, pets and “OC” (original characters, a popular form of creative self-expression) are also mentioned as areas where young people are willing to spend generously, even if they are “self-deprecatingly poor” (自己穷养, zìjǐ qióngyǎng).

The New “Middle-Class Pitfalls”: Fitness, Health, and the Great Outdoors

The report further identifies the new “middle-class pitfalls” (中产三坑, zhōngchǎn sānkēng) – areas where those earning over 10,000 RMB (approximately $1,400 USD) per month are increasingly spending their money. Topping the list are:

1. Fitness: 45.7%
2. Healthcare and wellness: 43.3%
3. Outdoor activities: 41.6%

These three categories significantly outpace other areas like travel (37.1%), music festivals/concerts (36.4%), “mysticism” (玄学, xuánxué – referring to practices like astrology and fortune-telling, 34.4%), 3C electronics (32.9%), and pets (27.4%). This clearly highlights the growing emphasis on physical and mental well-being among young professionals. The report notes the image of “sweating in the gym, soaking wolfberries in a thermos cup, and engaging in cardio-intensive outdoor activities,” (健身房里挥汗如雨，保温杯里泡着枸杞，加上对心肺功能要求高的花式户外运动), indicating a strong desire to escape workplace pressures and prioritize health.

The report also observes gender differences in spending priorities. Men tend to spend more on digital products and outdoor equipment, while women are more inclined to invest in fitness and entertainment experiences like concerts.

Red and Black Lists: Satisfaction and Regret in Spending

Beyond just tracking where money is spent, the report also delves into consumer satisfaction and regret. It creates a “consumption upgrade red and black list” (消费升级红黑榜, xiāofèi shēngjí hónghēibǎng), ranking categories based on reported satisfaction and regret levels.

The “satisfaction red list” is topped by:

1. Watching dramas (plays, musicals):
2. Fitness and body shaping:
3. Fishing:
4. Following celebrities (追星, zhuīxīng):
5. Scripted murder games (剧本杀, jùběn shā)/Escape rooms/Interactive dramas:
6. Travel:

Surprisingly, “watching dramas” emerges as the most satisfying “consumption upgrade,” suggesting the strong emotional value and immersive experiences these forms of entertainment provide. Even more unexpectedly, “fishing,” often perceived as an activity for older generations, ranks third, indicating its newfound appeal among young people, potentially as a way to de-stress and connect with nature. The report jokingly mentions “spending big money, catching big fish, worth it!” (花大钱，钓大鱼，值！).

Conversely, the “regret black list” is topped by:

1. Psychological counseling:
2. Cultural collectibles (文玩, wénwán):
3. Tutoring and training:
4. Anime and related merchandise (二次元, èrcìyuán):
5. Snacks:
6. Going to the movies:

The inclusion of “psychological counseling” at the top of the regret list is notable, suggesting potential issues with perceived value or effectiveness. “Cultural collectibles” and “anime merchandise” also appear on the regret list, potentially due to overspending on items with inflated prices or diminishing resale value. The report highlights the “rollercoaster” experience in these markets: “high premium purchase, low price sale in the seafood market” (高溢价买入，海鲜市场低价出), a vivid metaphor for losing money on depreciating assets.

Influencers and Future Outlook

The report also explores the influence of social media platforms on consumption decisions, finding that “Little Red Book” (Xiaohongshu 小红书), a popular Chinese social media and e-commerce platform, dominates as the primary source of consumption inspiration for both men and women. Nearly 70% of female respondents reported being influenced by Xiaohongshu, while it also ranked first for male respondents. Douyin (抖音, Chinese TikTok) and Bilibili (B站) also exert significant influence, particularly among male consumers.

Looking ahead, the survey concludes with an assessment of future “consumption upgrade” trends. Younger generations, particularly the 00s cohort, are more optimistic about the sustainability of their current spending habits, believing their enthusiasm will endure. Older Millennials (90s and 85s) are more uncertain, acknowledging the potential for both continued “upgrade” and sudden shifts in priorities.

Ultimately, the “2024 Consumption Upgrade Report” paints a fascinating and nuanced picture of young Chinese consumers. While “consumption downgrade” rhetoric may capture certain aspects of their behavior, it overlooks the simultaneous and often strategic “consumption upgrade” taking place in areas that prioritize experiences, personal growth, and lifestyle enhancement. In a society undergoing rapid change and facing various economic and social pressures, young Chinese are increasingly seeking immediate gratification, emotional fulfillment, and self-improvement, even amidst broader economic uncertainties. This shift towards “experience-driven” and “emotion-based” consumption signals a potentially long-term trend, reshaping the landscape of the Chinese consumer market and offering valuable insights into the evolving values and priorities of China’s younger generations.

Anecdotes from the Front Lines of “Consumption Upgrade”

To further illustrate these trends, the report includes several personal anecdotes from survey respondents, offering a glimpse into the diverse and individualistic ways in which “consumption upgrade” manifests in real life:

• @弥舟| Female, 00s: “The most worthwhile upgrade was spending half a year in Sanya (a popular tropical island destination) for vacation, living alone without any external influences. I discovered my most comfortable lifestyle and understood myself better. Also, the new otome game (乙女游戏, yǐnǚ yóuxì – a dating simulation game targeted at women) Love and Deepspace (恋与深空) that I downloaded this year seems to have helped me break free in romantic relationships. Loving a fictional character is also great.”
• @西西 | Male, 00s: “Beauty and wellness – male beauty is a major trend. The frequency of using various men’s skincare and perfumes is increasing. Many color-correcting and whitening products (although I don’t use them) are also being used by more and more people. After watching What’s Worth Buying (好东西, hǎo dōngxī – a popular product review show), I also bought a bottle of sunscreen. In 2023, my spending on this category was basically zero. The least worthwhile is probably various cultural collectibles and trendy toys. I don’t see their practical value, just the deception given by consumer culture.”
• @小雨| Female, 00s: “The most worthwhile was spending heavily on yoga teacher training courses, and also getting a yearly membership at the yoga studio I frequent. The upfront cost was a bit high for someone just starting work, but thankfully my parents supported me. It’s not just stress relief, but also meeting new friends and exploring new areas, a way to provide myself with emotional value. After being repeatedly disappointed by the inconsistent quality of many wanghong (网红, wǎnghóng – internet celebrity) coffee shops, I will slowly reduce the frequency of eating out for coffee and instead buy coffee tasting courses to improve my sensory acuity.”
• @忧伤的小鲨鱼| Female, 95s: “The biggest consumption upgrade in 2024 was continuously buying thousands of yuan worth of stones in various live streams – yes, stones, rocks. It started with the viral video about the Ailaoshan exotic mineral mine fire in October last year. Because of that video, I visited a natural history museum during my trip to Inner Mongolia in October, and since then, I have been deeply in love with sparkling stones. After the trip, I started buying, buying, buying in various live streams. After all, every natural mineral is unique. Now I have collected all kinds of exotic minerals, blue-veined stones, Xianghualing fluorite, Yaogangxian fluorite… The upgrade has started to involve buying more expensive, better quality stones. Sometimes when I’m very tired from working overtime, when I get home and see the small stones in the display cabinet, more sparkling than blind boxes and figurines, I suddenly feel that the troubles of work are insignificant in the face of the eternal silicon-based life.”

These personal stories vividly illustrate the diverse and often deeply personal motivations behind the “consumption upgrade” trend, highlighting the shift towards prioritizing experiences, self-improvement, and emotional well-being among young Chinese consumers. It suggests a more complex and nuanced understanding of the Chinese consumer market, one that moves beyond simplistic narratives of “consumption downgrade” and recognizes the evolving aspirations and spending habits of China’s dynamic younger generations.