Kathmandu— China is experiencing a surge in service consumption driven by the integration of digital technologies like artificial intelligence (AI), virtual reality (VR), and augmented reality (AR). In the first half of 2026, retail sales of services rose 5.3 percent year-on-year, outpacing goods sales by 4.2 percentage points, with tourism, consulting, and cultural experiences leading the growth. This shift is being actively encouraged by government policies aimed at unlocking internal momentum within the sector and fostering new avenues for economic expansion.

Surging Service Sector Growth

Data from the National Bureau of Statistics reveals a robust performance in China’s service sector, with double-digit growth observed in tourism, consulting, leasing, and cultural activities. This positive trend prompted the State Council to issue guidelines in August 2024 promoting high-quality development in service consumption through innovation. The emphasis on digital technology as a key enabler is evident in initiatives like the implementation plan rolled out by the Ministry of Commerce and seven other departments in June, focused on accelerating the integration of AI into consumer spending.

AI Powers Personalized Experiences

The performing arts market exemplifies how digital technologies are enhancing consumer experiences. In 2025, large-scale commercial performances generated over 30 billion yuan (4.42 billion U.S. dollars) in box office revenue and spurred an additional 220 billion yuan in related cultural and tourism spending. Companies like Rhythm Beat Technology Co., Ltd. are leveraging AI to create “smart agents” that personalize travel itineraries, including ticket selection, hotel recommendations, and transportation arrangements. Luo Zhao, general manager of the company, explained that these tools help consumers navigate a growing number of service options, stating, “If the performing arts market is a feast, we are providing the chopsticks that bring the dishes directly to diners.”

Data-Driven Insights into Consumer Behavior

Digital platforms are also transforming how service providers understand consumer preferences. Meituan, a leading local services platform, has observed rapid growth in online consumption among individuals over 50, with this demographic showing a preference for higher-end hotels. Zhang Lin, president of the Meituan Research Institute, highlighted that these insights reveal previously overlooked spending power within middle-aged and older consumers. This shift reflects a broader trend where Chinese consumers are increasingly prioritizing experiences and personal enjoyment over simply acquiring useful products.

From Products to Experiences

Liu Xiaolong, global partner at Kearney, noted this transition from “buying useful products” to “buying what they like,” emphasizing the need for service providers to strengthen their understanding of consumer desires and build engaging communities. Traditional market research methods are proving inadequate in capturing these evolving needs, with trends on social media offering more accurate signals of emerging demand. Liu added that emotions expressed online often provide a clearer indication of consumer preferences than conventional data.

Online Consumption Sees Significant Gains

According to the Ministry of Commerce, online service consumption in China grew by 22 percent in 2025. Online sales of sports event tickets, tourism products, and dining services experienced particularly strong growth, increasing by 63.3 percent, 40.6 percent, and 23.7 percent respectively. Industry observers believe these trends demonstrate the potential for digital technologies to generate more diverse service offerings and create entirely new consumption scenarios.

The continued integration of digital innovation is expected to further drive the upgrade and expansion of China's service consumption by shifting from standardized supply to personalized matching.

(With inputs from Xinhua)

Originally published on abcnews.com.np.