Guan Lixin: Triple Path to Unleashing the Consumption Potential of Submerged Markets
At present, China's economy is in a critical period of high-quality development, and continuously expanding domestic demand and optimizing supply are of paramount importance. The recent Central Economic Work Conference clearly pointed out the need to "deeply implement the special action to boost consumption, formulate and implement plans to increase the income of urban and rural residents, and expand the supply of high-quality goods and services." The conference also made important arrangements for urban and rural development, requiring "coordinated promotion of urbanization construction and comprehensive rural revitalization with county towns as important carriers, and promoting high-quality development of county-level economy." This series of arrangements accurately anchored the huge potential and broad depth of the sinking market, and found the key node connecting the expansion of domestic demand and the coordinated development of urban and rural areas. A profound understanding of the consumption characteristics, development logic, and future path of the sinking market is of great practical significance for implementing the central deployment and consolidating the economic foundation.
From Zibo in Shandong and Tianshui in Gansu, which have become popular food destinations, to Xixian in Shanxi and many places in Guizhou, which have become popular check-in points driven by games and "village supermarkets", the vast sinking market is showing its consumption potential leading the country.
From the perspective of consumption growth rate, the consumption growth in the sinking market is significantly faster. According to data from the National Bureau of Statistics, since the 18th National Congress of the Communist Party of China, the growth rate of retail sales in rural consumer markets has been higher than that in urban areas for several consecutive years. In 2024, the retail sales of consumer goods in rural areas reached 6.7 trillion yuan, a year-on-year increase of 4.3%, with a growth rate 0.9 percentage points higher than that in urban areas. Meanwhile, some small and medium-sized cities in certain regions have also shown outstanding performance, such as Shaoxing, Jiaxing, and Yangzhou in the Yangtze River Delta region, where the total retail sales of consumer goods increased by 6.7%, 5.3%, and 6.6% respectively.
From the perspective of consumer objects, the consumption in the lower tier market shows a clear trend of diversification, personalization, and quality upgrading. Consumers in the lower tier market are shifting from survival oriented consumption to development oriented and enjoyment oriented consumption. According to the "Rural Green Book: Analysis and Forecast of China's Rural Economic Situation (2024-2025)" data, the per capita service consumption expenditure of rural residents in 2024 was 7767 yuan, an increase of 8.4% over the previous year. Delivery and online retail are also gradually becoming popular in the sinking market. According to data from a certain platform, since 2025, delivery orders from supermarkets in various county towns have increased by 69% year-on-year, with orders from convenience stores and large shopping malls increasing by 37% and 76% respectively.
From the perspective of consumption patterns, consumption in lower tier markets is gradually shifting towards online channels. Data shows that by 2022, 39% of rural residents will shop online at an average frequency of 1 to 5 times per month, and 18.9% of rural residents will consume online more than 6 times per month. In the first seven months of this year, the online retail sales in rural areas increased by 6.4% year-on-year, while the online retail sales of agricultural products increased by 7.4% year-on-year. The e-commerce environment is becoming increasingly prosperous and perfect.
It can be said that the huge consumer demand, increasingly abundant consumer supply, and constantly improving consumer environment have jointly constructed the enormous consumption potential of the sinking market.
The massive size of the sinking market has solidified the foundation for the development of consumer space. From the perspective of administrative divisions, the sinking market that encompasses nearly 300 prefecture level cities, over 2800 county-level administrative regions, and over 38000 township level administrative regions is an important engine for continuously expanding domestic demand. Compared with residents in first and second tier cities, consumers in the sinking market generally have less living pressure and higher consumption enthusiasm, especially the sustained increase in income of rural residents, which strongly supports the rapid growth of consumption. With the development of urban-rural integration and the promotion of new urbanization construction, residents' operating income and wage income will further increase, driving the consumption performance of the sinking market to strengthen.
Under the continuous evolution of the competitive landscape in the consumer market, third - and fourth tier cities and county-level markets are also attracting more consumer resources to sink and further enrich consumer supply. As well-known brands and enterprises such as Starbucks and Haidilao choose to root in third - and fourth tier cities and county towns, their level of flexible adjustment according to the needs and preferences of consumers in the sinking market will continue to improve. At the same time, digital transformation and marketing innovation will empower traditional businesses, enhance consumer experience and stickiness, and create new forms, models, and scenarios of consumption starting from the sinking market.
The continuous construction of urban and county-level commercial systems will further improve the infrastructure of commercial circulation and enhance the consumption conditions of sinking markets. Pilot projects such as national demonstration pedestrian streets and 15 minute convenient living circles will accelerate the pace of urban commercial transformation and promote the transformation of old commercial districts towards quality and convenience. By transforming the three-level logistics distribution system of counties, townships, and villages through the "Thousand Sets and Ten Thousand Stores" initiative, the coverage of comprehensive commercial and trade service centers or convenience stores in counties, townships, and villages across the country has significantly increased, and logistics distribution has become more efficient. As an important entry point for the construction of consumer infrastructure, the continuous improvement of facilities and environment in the sinking market will further stimulate the consumption vitality and endogenous power of the sinking market.
To continuously unleash the consumption potential of the sinking market and promote high-quality development of the county economy in the future, we still need to start from the triple path. One is to deepen the construction of a people-oriented new urbanization. Orderly promote the integration of urban agglomerations and the urbanization of metropolitan areas, rely on the radiation of central cities to drive the common development of surrounding cities and counties, promote convenient commuting, industrial supporting facilities, and convenient living, and guide the coordinated development and intensive and compact layout of large, medium, and small cities and towns. This will help promote market integration construction, enhance industrial support capacity and public service level, improve the social security system, steadily promote equalization of basic public services, and improve people's quality of life.
The second is to actively improve the consumption environment in the sinking market. Strengthen the construction of commercial infrastructure in third tier and below cities and rural areas, continue to improve the three-level logistics system in counties and villages, establish a sound commercial and trade service network, enhance and optimize the supply level of goods and services, and improve the convenience and comfort of consumption. At the same time, standardize the order of the consumer market, strengthen market supervision, increase the crackdown on illegal activities such as counterfeiting and false advertising, and continuously optimize the consumption environment in the sinking market.
The third is to enhance the endogenous driving force of consumption in the sinking market. Accelerate the innovative application of technologies such as the Internet of Things, artificial intelligence, and low altitude economy in the sinking market, and accelerate the integration of primary, secondary, and tertiary industries. Support the deep integration of agriculture with industries such as culture, education, tourism, and health care, with the aim of extending the industrial chain, enhancing the value chain, and creating a supply chain. Promote the integrated development of the circulation industry and service industry, and better meet the growing service consumption needs of residents in the sinking market. (The author is a researcher at the Institute of Circulation and Consumption, Research Institute of the Ministry of Commerce)