County-level consumption on the rise

China has unveiled a broad policy package aimed at expanding and diversifying consumer markets in its vast network of counties and townships, seeking to unleash domestic demand outside major metropolitan centers.

The Ministry of Commerce and eight other central departments issued the guideline on Aug 18, outlining 18 measures covering upgrades to commercial infrastructure, business format innovation, diversifying the supply of goods and services, distribution networks and financial support.

The initiative comes as county and township retail spending commands an increasingly vital share of the national economy.

Sales of consumer goods in county and township markets accounted for 39.1 percent of the national total in the first seven months of the year, up 0.3 percentage points from a year earlier.

Rural retail sales rose 2.4 percent year-on-year during the same period, more than double the 1.1 percent growth in urban areas. Rural retail growth has outpaced or broadly matched urban growth for 55 consecutive months, according to the Ministry of Commerce.

"This is not a short-term phenomenon, but a long-term and stable structural trend in China's consumer market," said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

County-level areas cover some 90 percent of China's total land area, accommodate nearly half its permanent population and generate about 40 percent of national economic output, according to the ministry. Their broad geographic coverage, distinctive local industries and relatively complete economic structures give them considerable room for further growth, Zhou said.

However, the supply of products in these markets has not always kept pace with changing consumer demand. An official survey found that 49.4 percent of rural respondents regarded limited product choice as the biggest problem with offline shopping. Shortages are particularly apparent in elderly care, childcare, healthcare, leisure and entertainment.

The latest guideline reflects a shift from building basic commercial networks to actively invigorating the market, said Gong Jun'an, an assistant researcher at the Chinese Academy of Macroeconomic Research, a think tank of the National Development and Reform Commission.

Earlier programs focused primarily on establishing commercial outlets, logistics networks and rural e-commerce systems linking counties, townships and villages. With those foundations largely in place, policymakers are now placing greater emphasis on the quality of supply, new consumption scenarios and the environment needed for businesses and consumers to thrive.

"Consumption in county-level areas is moving beyond basic necessities toward higher-quality goods and more diversified services," Gong said. "The policy is intended to guide supply to catch up with that change."

The guideline calls for the renovation of existing commercial facilities, better use of idle properties, the expansion of chain operators into counties and support for local brands. It also encourages closer links between commerce, agriculture, culture, tourism and sports.

Zhou said supply-side improvements should be the immediate priority because they can be supported through public investment and policy guidance, while changes in income and consumption expectations take longer to materialize.

Consumer platforms are already seeing demand spread into new areas.

Meituan, a major Chinese services platform, said at an industry presentation in May that growth in active users and local-service orders in county-level markets was outpacing that in major cities.

Instant retail, dining, leisure, household services and local tourism were among the areas showing strong momentum.

Retail chains are also using lower-tier markets to expand. Busy Ming Group, China's largest snack and beverage retail chain by store count, had 21,948 stores across the country by the end of 2025, with about 60 percent located in counties and townships, covering 1,401 counties.

The company attributed its growth to demand for affordable everyday products and a more efficient supply chain. It buys directly from more than 2,500 manufacturers, while 56 warehousing and distribution centers generally enable products to reach stores within 24 hours.

But a growing market does not guarantee success for every brand. County-level fast-moving consumer goods sales rose 2.5 percent in NielsenIQ's latest rolling-year data, compared with 0.5 percent in higher-tier markets. Among the 20 leading FMCG manufacturers tracked by the research firm, only four recorded sales growth in county markets.

The figures point to the limits of simply opening more stores or cutting prices.

"County-level markets are not smaller copies of major cities," said Tian Lihui, dean of the Institute of Finance and Development at Nankai University in Tianjin.

Urban store formats, cost structures and product ranges cannot simply be transplanted into counties, where consumers generally place greater emphasis on essential needs, value for money and practicality, he said.

Brands need to adapt their product mix, pricing, store size and supply chains. At the same time, the entry of chain operators should not come at the expense of local shops, which remain an important part of the county commercial ecosystem, he added.

The policy also calls for different approaches across China's more than 1,800 county-level administrative areas. Larger and wealthier counties will be encouraged to upgrade commercial districts and attract regional debut stores. Counties with moderate economic foundations will focus on local industries and distinctive consumption, while smaller counties will prioritize basic retail and logistics services.

Gong said the guideline avoids a one-size-fits-all approach. Local authorities should consider population trends, local resources and commercial vacancy rates when deciding what facilities and business formats are needed.

Long-term growth in county-level consumption will also depend on employment and income. The guideline combines support for job creation and entrepreneurship with interest subsidies for eligible consumer loans and service-sector businesses.

While affordable credit can bring forward some spending, Tian said that it cannot replace stable employment or reliable income expectations.

"Financial tools are an amplifier, not the engine," Tian said. "The foundation is whether county-level industries can retain people, create jobs and provide residents with sustainable incomes."

lijing2009@chinadaily.com.cn