Resilience of Consumption: Population, Purchasing Power, and a Blueberry

The obvious divergence between consumer stocks consistently underperforming the broader market and resilient macro consumption data reflects the deep structural transformation underway in China’s consumption landscape. According to the macro thematic report from Changjiang Securities, the rise of consumption in lower-tier cities and increased purchasing power under a low-inflation environment have jointly supported the current domestic consumption bottom, yet these dynamics have not been significantly captured by asset prices in the stock market.

Report data show that since September 24, 2024, Wind All-A has gained over 72%, while the Changjiang Discretionary Consumption Index and Changjiang Essential Consumption Index have lagged by about 30 and 49 percentage points respectively, as consumer sectors continue to significantly underperform the broader market.

However, the macro data tell a very different story. The report notes that over the past five years, consumption has played an increasingly important role in total demand: in 2025, final consumption expenditure contributed 52% to GDP growth, far exceeding capital formation (15.3%) and net exports (32.7%). This pattern points to two core questions: Why do macro consumption data and market returns “feel hot and cold”? Where does the resilience of domestic consumption come from as the GDP growth center trends lower?

To answer this, the report analyzes consumption from two dimensions: geographic “breadth” and the potential “depth”. The former refers to the rise of consumption in lower-tier cities driven by population flow, while the latter concerns the quiet expansion of consumer surplus through manufacturing supply optimization under low inflation. The report believes that as new consumer companies better aligned with current characteristics go public, the gap between consumer indices and macro consumption data is expected to close faster.

Population “shifts downward”: Consumption in lower-tier cities is the new engine

The Changjiang Securities report points out a notable feature in the current consumption pattern: Consumption in higher-tier cities is clearly slowing, while recovery is faster with lower city tiers.

From official retail data, after sorting provinces by retail scale and growth in 2025, Beijing, Shanghai and retail-leading Jiangsu fall into “declining regions” with negative retail growth; meanwhile, many smaller central and western provinces belong to “star regions” or “opportunity regions” with growth above median. This is also shown at the micro level among listed companies: Hang Lung Plaza, with stores concentrated in first-tier and new first-tier cities, saw rental income growth decline after 2020; while Wuyue Plaza, broadly distributed in second-tier and below cities, saw rental income accelerate after 2022, overtaking Hang Lung Plaza—a side proof of divergent consumer prosperity across city tiers.

The report attributes the rise of lower-tier consumption to a combined effect of three factors: population, income, and consumption propensity.

On population, the report cites Baidu migration annual data: Over the past five years, migration has overall “shifted downward” — net outflows from first, new first, and second-tier cities, net inflows into third-tier and below cities. By province, in 2025, Central, Northwest, and North provinces show stronger population absorption. The report believes two main reasons are behind this: First, infrastructure investment has shifted focus to Central and West, changing migrant worker job direction—since 2021, migrant workers in construction declined, while the proportion entering Central and West increased; Second, traditional high-paying sectors are moving toward high-quality development, unreasonable high pay corrected, and some employees squeezed out. Using Shanghai as example, finance, education, internet salaries and employment growth have both declined in recent years, weakening appeal to high-tier city employment.

On income, the report notes that urban per capita disposable income growth in Central and West provinces, centered on third- and fourth-tier cities, has consistently outpaced first-tier cities and eastern provinces, moving up the rankings. With strategies to boost Central and West, minimum wage gaps with first-tier cities are narrowing. On consumption propensity, the report analyzes 383 prefecture samples, finding no significant correlation between marginal propensity to consume and per capita GDP, and no statistically significant difference in marginal propensity between city tiers.

The report concludes: a larger consumer “pool” and more resilient income growth together make consumption in lower-tier cities the key support for macro consumption data; and compared to more marketized first-tier cities, lower-tier consumption is less covered by listed company performance data—hence a first reason for the divergence between macro consumption statistics and consumer index performance.

Low inflation ≠ weak consumption: Purchasing power is quietly rising

The second analysis thread in the report highlights the unique mechanism of low inflation for consumption.

On household saving preferences, central bank surveys show the proportion choosing “more savings” continues to rise, reinforcing the trend of core CPI; meanwhile, average consumption propensity remains below pre-2019 levels, showing further decline. On the surface, the low-inflation environment seems to depress household consumption.

However, the report cites lifestyle data: since 2022, cost-of-living indexes across major cities have declined, but actual purchasing power indexes have simultaneously increased. The key is that current income growth outpaces price growth—falling prices actually support purchasing power. The report uses coastal region wage rates as a benchmark and quantifies: since 2022, the labor time required to buy a pound of scallops, a pound of carp, a BYD new energy car, or a second-tier city second-hand apartment has all declined.

The report’s theoretical endpoint is “consumer surplus”—the gap between psychological price and market price. In this framework, marginal propensity to consume as measured by spending vs. income may systematically understate actual consumption willingness; expanding consumer surplus is the key to understanding macro consumption resilience under low inflation—this forms the second reason for divergence between macro consumption statistics and the consumer index.

One blueberry, one car, one cherry: Three samples of supply-side benefits

To support these judgments, the report chooses three industry cases—blueberries, automobiles, cherries—to show how supply-side optimization releases consumption potential via consumer surplus.

Blueberry case illustrates the demonstration effect of domestic capacity expansion. Before 2020, blueberries depended heavily on imports and were expensive. Since 2020, domestic blueberry output rapidly expanded—from about 150,000 tons in 2018 to 780,000 tons in 2024, while prices for all varieties fell over 20%. But an oddity: wholesale average prices on e-commerce platforms instead rose, from about 56 yuan/kg in 2020 to 96 yuan/kg in 2024. The report says this “falling single-variety price yet rising average price” backs up the logic: lower prices reduce the entry threshold, activate consumer surplus, and drive consumers toward pricier, higher-quality options—price drops thus become a process of improvement and upgrading.

Automobile case shows a similar pattern. In Q3 2024 and 2025, average prices across sedan grades fell year-on-year; meanwhile, sales share of higher-grade (B-class) cars kept rising. Correlation analysis finds that between January 2021 and December 2025, the narrowing price gap between B-class and A-class cars correlates strongly (coefficient 0.81) with the market share increase of B-class. Internationally, the report compares BYD Qin price indexes in China and Toyota Corolla in Japan—between 2014-2024, new BYD Qin prices fell about 44%, price index (standardized by disposable income) fell 73%; while the Corolla price rose 29%, price index nearly flat. In other words, urban residents now need only 30% of the labor time in 2014 to buy a same-class car.

Cherry case points to global supply chain optimization’s contribution to consumer surplus. After the opening of Chancay port in Peru, a key Belt and Road project, in November 2024, imports of Chilean cherries rose rapidly, and landed prices in 2025 fell about 48% year-on-year. The report estimates importing from Peru now saves about 16 days in shipping time, from Brazil about 23 days; logistics costs fell about 37% in 2025, contributing to a 36% fall in landed prices.

The report sees macro drivers behind all three cases: since 2016, the government accelerated a unified national market, broke local protection, enabling capacity aggregation; meanwhile, Belt and Road opened global supply chains, boosting cost savings and efficiency. Data show that in 2025, social logistics costs as a share of GDP fell to 13.91%, lowest in years. The report concludes: China’s strength in manufacturing and supply chains continues to press down costs, leaving plenty of room for “volume-for-price” consumer expansion.

What’s next: Embracing tier-down markets and low-inflation dividends

The report cites historical cases proving consumption is not doomed to stagnate under low inflation. Case in point: Japanese retailer Uniqlo launched a fleece jacket at just 1,900 yen—less than one-third typical prices—in autumn 1998, selling 2 million units in one season and turning around its parent Fast Retailing’s four-year stock slump, with Japan’s retail index outperforming Nikkei 225 by over 40 points in 1999. This shows: supply-side innovation expanding consumer surplus can also trigger powerful consumption and asset price flexibility in low-inflation cycles.

Looking ahead in China, the report admits headwinds persist. Referencing previous research, the effect of household deleveraging after property price declines may last about nine years—with high household saving intention likely through 2030. Still, weak nominal growth does not mean a lack of structural consumption opportunities: “income-pressured” and “comfortable” regions in central, northeast, and west provinces have not seen clear deleveraging, supporting the report’s view of resilient lower-tier consumption—implying related market opportunities are not yet fully reflected in asset prices.

Policy-wise, the report cites Minister of Commerce Wang Wentao: “Regions represented by third- and fourth-tier cities and counties account for over 70% of China’s population, 60% of GDP, and 60% of retail sales”; and CSRC Chairman Wu Qing: The growth enterprise board will add more precise and inclusive listing standards, actively supporting new consumer/modern service sector companies to list.

The report believes that with policy support, as high-quality new consumer firms with resilient growth go public and better reflect current consumption patterns, the gap between consumer indices and macro data should close faster—“the inflection point for China’s consumer era may be just around the corner”.

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