Intelligent consumption has become a new bright spot in China’s consumer market. Photo: TUCHONG

Intelligent consumption—spanning fields such as smart homes, healthcare, transportation, and education—has become a new bright spot in China’s consumer market. This emerging sector, which aligns with the public’s aspiration for a higher quality of life, represents a strategic opportunity to advance both consumption and industrial upgrading in tandem. Driven by the dual impetus of technological advances and supportive policies, China’s intelligent consumption sector has grown rapidly. According to the 2024 China Smart Wearable Devices Industry Market Research Report and the 2024 Automotive Industry Analysis Report, the market size for smart wearables grew from 21.26 billion yuan in 2017 to 93.47 billion yuan in 2023, with a compound annual growth rate of 28 percent. Meanwhile, the penetration rate of smart vehicles rose from 18.5 percent in 2019 to 57.1 percent in 2023, with a compound annual growth rate of 34.2 percent. Despite this momentum, the future of the intelligent consumption market remains uncertain. Ongoing exploration and innovation are urgently needed to tackle emerging challenges and lay a solid foundation for its sustainable, stable, and healthy development.

In-depth analysis of development constraints 

Unlike traditional forms of consumption, intelligent consumption simultaneously manifests economic, social, technological, and cultural attributes. Its growth is no longer determined solely by supply-side production capacity or demand-side income levels. Accordingly, it is suggested to move beyond the conventional “production-consumption” analytical framework and adopt a multidimensional approach that incorporates “psychology-capability-market-security” in order to better understand the factors constraining the full release of intelligent consumption’s potential.

First, cultural adaptation barriers have weakened the internal momentum driving intelligent consumption. Nowadays, intelligent consumption development not only hinges on consumers’ economic capacity, but also depends on consumers’ digital skills, appreciation of the value of intelligent products, and familiarity with intelligent consumption ecosystems. Artificial intelligence (AI) is reshaping human interaction and the dynamics between people and machines. Online spaces and smart platforms organized around shared interests have become key arenas for consumption. However, shifts in social and cultural environments brought about by new consumption patterns present adaptation challenges. Individuals with lower levels of education and income—particularly rural and elderly populations—are especially susceptible to digital anxiety, technophobia, and confusion over virtual value systems. These groups often lack the ability to adjust their self-identity in digital contexts and may resist integrating into digital cultural spaces, thereby hindering the broader adoption of intelligent consumption.

Second, a widening “digital intelligence gap” is creating disparities in consumers’ ability to participate in intelligent consumption. With the deepening integration of big data and algorithms, the traditional “digital divide”—defined by gaps in access, usage, and outcomes—has evolved into a more complex and less visible “digital intelligence gap,” characterized by unequal capacities in intelligent interaction, digital literacy, and algorithmic fairness. This gap not only influences individuals’ consumer behavior in the intelligent era but also reshapes opportunity structures and power relations in society. Whether explicit or implicit, the “digital intelligence gap” further exacerbates the inequality in intelligent consumption. Frequent upgrades to AI products leave many users struggling to keep pace with rapid technological change. As AI continues to advance, those unable to adapt will fall further behind, exacerbating inequality and reinforcing the Matthew effect in the intelligent consumption sector.

Third, the lagging digital and intelligent transformation of small and medium-sized enterprises (SMEs) is constraining effective supply within the intelligent consumption market. Many SMEs face the predicament of “unable to transform, unwilling to transform, and dare not transform,” which weakens their innovation potential and responsiveness. This, in turn, may further exacerbate market monopolies, undermining both consumer welfare and the long-term sustainability and healthy development of the sector. In addition, disparities in digital and intelligent capabilities among enterprises from diverse industries lead to structural imbalances in market supply. In oversaturated sectors, firms may be trapped into price wars, continuously shrinking profit margins; in undersupplied areas, consumers are left with too few options and are unable to meet their needs. Over time, such imbalances can result in misallocated resources and declining market efficiency, ultimately curbing the sector’s overall growth.

Fourth, intensifying rights tensions among stakeholders are complicating efforts to protect consumers in the evolving digital marketplace. The intelligent consumption ecosystem brings together consumers, businesses, platforms, and government entities. While this diversity can spur innovation and competition, it also creates complex tensions around data rights and governance. Consumers, as primary data generators, often face excessive data collection, which may lead to invasive marketing practices, and discriminatory pricing driven by algorithms. More seriously, such practices can lead to fraud and other rights violations. Algorithmic manipulation also undermines consumer autonomy and interactivity, turning perceived freedom of choice into an “illusion” and exposing the limits of rational decision-making in data-driven environments. Moreover, the extensive expansion and involutional competition among digital platforms further destabilizes the ecological balance of the digital consumption market, with the resulting costs and risks frequently passed on to consumers—eroding trust and weakening the overall consumption environment.

Long-term growth mechanism 

To realize the vision of consumers who are willing, able, confident, and satisfied in their use of intelligent consumption, it is essential to identify key constraints and target efforts precisely, implement policies accurately, and explore the establishment of a long-term mechanism for expanding intelligent consumption that is dynamic, responsive to contemporary needs, and built on multi-stakeholder collaboration.

First, the endogenous drivers of intelligent consumption should be activated. Digital cultural identity plays a central role in shaping consumers’ acceptance of intelligent products and their perception of the value they provide. To begin with, user fatigue should be avoided. Enterprises could enhance the user experience of intelligent products by streamlining interfaces and establishing efficient customer service channels to reduce the learning curve. In addition, the perceived value of virtual goods and services should be redefined through innovative business models and improved product design, enhancing consumers’ sense of value. Finally, digital self-efficacy could be cultivated. Alongside digital skills training and support services, efforts should be made to build digital consumption communities and platforms that foster consumer communication, sharing, and learning, creating a positive and engaging environment for intelligent consumption.

Second, the mechanism for enhancing digital and intelligent consumption capabilities should be improved. Intelligent consumption should remain inclusive and attuned to the needs of all, particularly marginalized groups, through improvements in product quality and digital service delivery. In parallel, resources from businesses, associations, and local communities could be leveraged to build a robust system for raising digital literacy, integrating digital education into everyday life via training programs, experiential activities, and other means. Finally, intergenerational digital support within families should be encouraged to help bridge the “digital intelligence gap.” A diverse support framework is needed to close this gap and enable the elderly to transition smoothly from being “digital outsiders” to fully engaged “digital citizens.”

Third, it is suggested to establish a market supply-demand coordination mechanism. Firstly, policy support should be integrated to stimulate the motivation of key innovation entities. Incentives such as tax breaks and financial subsidies can lower the threshold for digital transformation among SMEs. The creation of research and development reserve funds should also be encouraged to increase investment in digital and intelligent technology development. Secondly, efforts should focus on integrating the “ecological chain–industrial chain–innovation chain” to promote synergies. The “entrepreneurs pose questions, scientists answer them” model should be advanced to foster a virtuous cycle in the sci-tech sector. Finally, diversified, multi-tiered and multi-field intelligent consumption scenarios should be actively developed to invigorate the consumer market. Priority should be given to promoting the “debut economy,” and accelerating the application of technologies such as AI in education, healthcare, and entertainment. At the same time, the development of age-friendly intelligent consumption environments should be intensified, with greater efforts to tap into the long tail effect.

Fourth, the consumption guarantee mechanism for new business forms could be optimized. To support incentive alignment and protect consumer rights in new business forms, existing systems and policies should be refined to help intelligent consumption move beyond reliance on short-term policy dividends and toward a more sustainable and independent development model. Firstly, coordination among government departments, cooperation between central and local authorities, and dialogue between regulators and enterprises should be strengthened to create a positive interaction pattern among innovators, regulators, and consumers. The “regulatory sandbox” approach should be explored to resolve the “Collingridge dilemma” that often arises between innovation and risk control. Second, given the economic and consumption heterogeneity across regions, a distributed approach to policymaking is essential, wherein differentiated policies can be developed and implemented at various levels to enhance flexibility and responsiveness. Finally, classification, grading, and rights-confirmation systems for public, enterprise, and personal data should be improved as soon as possible. These reforms will promote the safe, compliant, and efficient use of data as a production factor, help rebuild consumer trust, and improve the broader environment for intelligent consumption.

Wang Wenji is an associate professor from the School of Management at Nanjing University of Posts and Telecommunications. Xia Jiechang is a research fellow from the National Academy of Economic Strategy at the Chinese Academy of Social Sciences.

Edited by ZHAO YUAN