China's Consumption Revival Hinges on Silver Hair and Anime Fans

50.1 trillion yuan ($7.2 trillion). That's China's total retail sales for 2025. But growth slowed to just 3.7% for the year, with December hitting a mere 0.9%. Is the world's second-largest economy losing its consumption engine?

HSBC offered an intriguing answer in its report released Sunday. China's consumption recovery depends on two unlikely allies: seniors splashing cash on wellness and young consumers obsessing over anime, games, and pop toys.

The bank sees this generational divide as both opportunity and risk for 2026.

Nine Days of Festivities Won't Fix Everything

China's longest-ever Spring Festival holiday—nine days this year—will provide a "tailwind" for food, hotel, and tourism sectors, HSBC predicts. The extended break should particularly boost first-quarter growth in snack foods and dairy products.

But that's just a sugar rush. The real challenge lies deeper. "Current government stimulus measures to boost consumption had started to fizzle out," the report warns. Without renewed policy support, 2026 won't outperform last year's modest gains.

China's consumption engine has been sputtering despite various government interventions. Appliance replacement subsidies, car purchase incentives, and other measures haven't sparked the spending spree Beijing hoped for. Consumer confidence remains fragile, and economic uncertainty persists.

The Labubu Phenomenon and Its Limits

Consider Pop Mart, the Hong Kong-listed toy company that HSBC highlighted. Its Labubu character became a global sensation, driving impressive growth. But analyst Lina Yan sounds a cautionary note: "If the trend slowed down, there would be some uncertainty about the group's growth outlook for 2026."

This captures the essence of China's youth consumption market. Viral hits can create explosive growth, but they're inherently volatile. Today's must-have collectible becomes tomorrow's forgotten fad.

The same volatility affects other companies HSBC mentioned—bubble tea maker Guming Holdings, budget retailer Miniso, and gold brand Laopu Gold. They've all found ways to tap into young consumers' evolving tastes, but sustaining that connection requires constant innovation.

Young Chinese consumers drive trends with remarkable speed and intensity. They'll queue for hours for limited-edition toys, spend hundreds on anime merchandise, and abandon brands just as quickly if they lose their cool factor.

The Steady Rise of Silver Spending

Senior consumers offer a different proposition entirely. Their wellness expenditures represent more predictable, sustained growth. As China ages rapidly, demand for health products, medical devices, and fitness services continues expanding.

This demographic shift creates opportunities for international brands. Companies that can authentically connect with Chinese seniors' health and lifestyle aspirations stand to benefit from this "silver economy." Unlike youth trends, senior spending patterns tend to be more stable and less prone to sudden shifts.

The contrast is striking: while young consumers chase the next viral sensation, seniors focus on long-term health and quality of life. Both groups have money to spend, but their motivations couldn't be more different.

March's Policy Moment

HSBC expects the "two sessions" in March—China's annual parliamentary meetings—to unveil new consumption support measures. The timing makes sense. Beijing needs domestic demand to offset external headwinds and achieve its goal of transitioning from export-dependent to consumption-driven growth.

But what kind of policies will actually work? Previous stimulus efforts delivered short-term bumps without addressing underlying consumer hesitancy. This time, China might need more structural reforms rather than quick fixes.

The challenge isn't just economic—it's psychological. Chinese consumers have grown cautious after years of uncertainty. Changing spending behavior requires more than subsidies; it demands confidence in the future.

Global Implications

China's consumption patterns matter far beyond its borders. When Chinese consumers embrace wellness trends, global health companies take notice. When they go crazy for collectible toys, international toy makers scramble to capitalize.

For multinational corporations, understanding these dual demographics becomes crucial. The strategies that work for China's seniors won't resonate with its youth, and vice versa. Companies need nuanced approaches that can navigate both markets simultaneously.