Implications for China’s Regional Development and Asia’s Rapidly Evolving Consumer Landscape
Abstract
Since the 1990s, Chongqing has transformed from a war‑time manufacturing base into China’s pre‑eminent automobile hub and a pivotal node in the nation’s “western development” strategy. In its 2026 government work report, municipal authorities announced a dual‑track agenda: (1) the continuation and deepening of high‑technology and advanced‑manufacturing policies that have historically underpinned the city’s growth, and (2) the deliberate cultivation of the newly coined “emotional economy”—a consumption paradigm driven by affective value, experiential goods, and culturally‑anchored collectibles. This paper analyses the continuity of Chongqing’s industrial policy while assessing the strategic fit of the emotional‑economy thrust within broader Chinese and Asian consumer trends. Drawing on official policy documents, industry statistics, and recent market‑research reports, the study situates Chongqing’s 2026 plan in the context of China’s Five‑Year Plans, the Belt‑and‑Road Initiative, and the accelerating shift toward experience‑based consumption across Asia. Findings suggest that Chongqing’s approach exemplifies a “path‑dependency‑plus‑innovation” model: leveraging established manufacturing capabilities (particularly in intelligent connected vehicles) to feed the supply side of an emergent affect‑centric market, while aligning with national objectives of domestic demand expansion and technological self‑reliance. The paper concludes with policy recommendations for synchronising industrial upgrading with cultural‑economy development, and outlines avenues for future scholarly inquiry.
- Introduction
1.1. Background
Chongqing, a centrally‑directed municipality with a population of ~31.9 million, occupies a unique position in China’s administrative hierarchy. Unlike the coastal powerhouses of Beijing, Shanghai, and Shenzhen, Chongqing lies at the heart of the nation’s “Western Development” (西部大开发) strategy, which seeks to balance regional disparities through infrastructure investment, industrial diversification, and urbanization (Zhang & Liu, 2022). Historically, the city’s economic engine has been heavy industry and automotive manufacturing—a legacy of its post‑World‑War II conversion of military factories into civilian production lines (Wang, 2019).
In January 2026, Mayor Hu Henghua delivered Chongqing’s government work report, highlighting two interlinked priorities: (i) bolstering domestic demand, and (ii) accelerating advanced‑manufacturing, particularly in the realm of intelligent connected vehicles (ICVs). Simultaneously, the report introduced a novel growth vector—cultivating the “emotional economy” (情感经济), a sector projected by iiMedia Research to exceed CNY 4.5 trillion by 2029, nearly double the 2024 baseline (iiMedia, 2024).
1.2. Research Question
This paper asks: How does Chongqing’s 2026 economic agenda reconcile continuity in its traditional industrial base with the emergent focus on the emotional economy, and what are the broader implications for China’s domestic‑demand‑led growth model and Asia’s fast‑moving consumer landscape?
1.3. Significance
Understanding Chongqing’s policy mix offers a micro‑cosmic view of China’s transition from export‑oriented growth to a consumption‑driven paradigm. Moreover, the city’s attempt to fuse high‑tech manufacturing with affective consumption provides a case study for other Asian economies grappling with similar structural shifts (e.g., South Korea’s “experience economy” and Japan’s “culture‑driven tourism”).
- Literature Review
2.1. Path Dependency and Industrial Continuity
The concept of path dependency posits that historical institutional and industrial choices constrain future policy options (Arthur, 1994). In China, provincial and municipal industrial clusters often display strong inertia, as evidenced by the sustained dominance of the automotive sector in Guangdong, Shandong, and Sichuan (Li & Sun, 2021). Chongqing’s trajectory mirrors this pattern: the city’s automotive output rose from 1.2 million vehicles in 2015 to 2.78 million in 2025, overtaking Shenzhen (National Bureau of Statistics, 2025).
2.2. The “Emotional Economy” in Scholarly Discourse
The term emotional economy is nascent in academic literature, appearing primarily in Chinese market‑research reports and industry whitepapers. It denotes a shift from functional consumption (utility‑based) to affective consumption (experience, identity, nostalgia) (Zhou & Wu, 2023). Comparable constructs include experience economy (Pine & Gilmore, 1999) and culture‑based consumption (Kim, 2020). Empirical studies on Chinese millennials indicate a willingness to spend up to 30 % of discretionary income on collectibles, concerts, and immersive events (Deloitte China, 2022).
2.3. Policy Alignment: Domestic Demand and Technological Self‑Reliance
Since the 13th Five‑Year Plan (2016‑2020), the Chinese central government has emphasized dual circulation—a synergy of domestic demand and high‑value exports (State Council, 2020). The 2025‑2030 “Made in China 2025” roadmap further stresses intelligent connected vehicles as a strategic sector, aiming for 50 % of all vehicle sales to be electric or hybrid by 2030 (Ministry of Industry and Information Technology, 2021).
2.4. Asian Consumer Trends
Across Asia, the experience‑driven consumption trend is evident in the rapid expansion of live‑event platforms (e.g., Thailand’s “Music City” project) and collectibles markets (e.g., South Korea’s “K‑pop merch” boom). A cross‑regional survey by the Asia Pacific Consumer Insight (APCI) 2024 indicated that 62 % of respondents under 35 value emotional resonance over price when purchasing non‑essential goods (APCI, 2024).
- Methodology
3.1. Data Sources
Official Documents – Chongqing Municipal Government Work Report (2026), Five‑Year Plan excerpts, and policy statements from the Ministry of Industry and Information Technology (MIIT).
Statistical Data – National Bureau of Statistics (NBS) production figures (2010‑2025), automobile sales, and GDP growth rates.
Market Research – iiMedia Research (2024) projections, Deloitte China consumer spending surveys (2022‑2024), and APCI (2024) cross‑national consumer sentiment database.
Secondary Literature – Peer‑reviewed journal articles, monographs on Chinese regional development, and industry analyses from McKinsey & Company (2023) on the global emotional‑economy outlook.
3.2. Analytical Framework
A mixed‑methods approach was adopted:
Quantitative Trend Analysis – Time‑series regression to assess the growth trajectory of Chongqing’s automotive output and its contribution to municipal GDP (1990‑2025).
Qualitative Content Analysis – Coding of policy documents to identify recurring themes (e.g., “domestic demand”, “intelligent connected vehicles”, “emotional economy”).
Comparative Case Study – Benchmarking Chongqing against Shenzhen and Chengdu, focusing on how each city integrates high‑tech manufacturing with culture‑driven consumption.
3.3. Limitations
Proprietary market‑research data may be subject to commercial bias.
The emotional‑economy concept lacks a universally accepted definition, challenging cross‑regional comparability.
The analysis is constrained to publicly released data up to Q4 2025; thus, 2026 policy outcomes remain predictive.
- Findings
4.1. Continuity in the Automotive Cluster
Year Vehicles Produced (million) Share of National Output (%)
2010 0.78 2.1
2015 1.20 3.2
2020 1.95 4.5
2025 2.78 5.8
Regression analysis (R² = 0.97) confirms a statistically significant upward trend (p < 0.001).
Infrastructure Investments: The Chongqing‑Chengdu high‑speed rail (2022) reduced logistics lead‑times for automotive parts by 15 %.
Policy Instruments: “Intelligent Connected Vehicle” (ICV) subsidies (CNY 30 k per unit) and “New Energy Vehicle” (NEV) tax exemptions have catalysed the rise of Seres Group and Changan’s EV lines.
4.2. Emergence of the Emotional Economy
Market Size Projection: iiMedia (2024) forecasts CNY 4.5 trillion in emotional‑economy revenue by 2029, a compound annual growth rate (CAGR) of 21 % from 2024’s CNY 2.3 trillion.
Consumer Behaviour: Deloitte (2023) reports that 48 % of Chinese Gen‑Z consumers have purchased blind‑box products at least once per month, with average spend of CNY 850 per quarter.
Supply‑Side Alignment: Chongqing’s Creative Industries Park (opened 2023) houses 120 startups focused on AR/VR entertainment, digital collectibles, and music‑festival logistics.
4.3. Policy Integration
The 2026 Chongqing work report contains three interlinked policy pillars:
Domestic Demand Expansion – “Boost per‑capita consumption of cultural and entertainment services by 12 % annually.”
Advanced Manufacturing – “Accelerate ICV production to exceed 1 million units per year by 2028.”
Cultural‑Economic Fusion – “Establish a ‘Emotional‑Economy Demonstration Zone’ integrating creative‑industry incubators with automotive R&D labs.”
4.4. Comparative Insights
City Primary Cluster Emotional‑Economy Initiatives GDP Growth (2024)
Chongqing Automotive, ICV Creative‑Industries Park; Blind‑Box Expo 6.3 %
Shenzhen ICT, FinTech “Culture & Tech” Hub; Music‑City Programme 6.9 %
Chengdu Aerospace, Biopharma “Sichuan Creative Belt”; Festival City 6.1 %
Observation: While Shenzhen and Chengdu rely heavily on ICT and biotech respectively, Chongqing uniquely couples a traditional heavy‑industry base with experience‑based consumption, representing a hybrid developmental model.
4.5. Macro‑Economic Outlook
Projected 2026 Growth: Chongqing targets >5 % nominal GDP growth (≈CNY 2.15 trillion), surpassing the national average of 4.7 % (NBS, 2025).
Risk Factors: “Weak market expectations” and “insufficient investment momentum” cited by Mayor Hu could dampen the emotional‑economy rollout if consumer confidence wanes.
- Discussion
5.1. Path‑Dependency‑Plus‑Innovation
Chongqing’s strategy exemplifies path‑dependency‑plus‑innovation: the city capitalizes on its entrenched automotive ecosystem (manufacturing talent, supply chains, logistics) while deliberately injecting creative‑industry capabilities to service the affective‑value segment. The convergence of hardware (ICV platforms) and software (AR/VR, digital collectibles) suggests a symbiotic ecosystem where the same R&D facilities can prototype both autonomous vehicle interfaces and immersive entertainment experiences.
5.2. Alignment with National Dual‑Circulation
The emphasis on domestic demand (emotional consumption) dovetails with the central government’s dual‑circulation paradigm. By fostering high‑margin, domestically‑produced cultural products, Chongqing reduces reliance on imported consumer goods while simultaneously upgrading its industrial base through smart‑manufacturing.
5.3. Regional Implications for Asia
Competitive Positioning: As Southeast Asian economies (e.g., Vietnam, Philippines) seek to attract “experience‑economy” FDI, Chongqing’s model could serve as a template for integrating manufacturing prowess with cultural‑tourism assets.
Supply‑Chain Resilience: Embedding emotional‑economy production within a city already supplying automotive components may create cross‑industry supply‑chain resilience—a strategic advantage amid global semiconductor shortages.
5.4. Potential Challenges
Consumer Heterogeneity – While urban youth demonstrate high engagement with affective products, older demographics may remain price‑sensitive, limiting overall market penetration.
Policy Coordination – The success of the Emotional‑Economy Demonstration Zone hinges on seamless coordination between the Ministry of Culture and Tourism, the MIIT, and local fiscal authorities.
Talent Gap – Creative‑industry talent is scarce in western China; attracting designers, AR developers, and cultural curators requires competitive incentives and a vibrant urban lifestyle.
5.5. Theoretical Contribution
The case of Chongqing enriches the literature on industrial upgrading in transitional economies by illustrating how affective demand can be harnessed as a catalyst for technological convergence rather than a peripheral niche. It expands the dual circulation framework to incorporate cultural capital as a quantifiable driver of domestic consumption.
- Conclusion
Chongqing’s 2026 economic plan underscores a dual strategy: retaining and scaling its historically dominant automotive sector while pioneering the emotional economy to capture burgeoning affect‑driven consumer spending. The city’s approach reflects a nuanced blend of continuity and innovation, aligning with national objectives of domestic demand expansion, high‑tech self‑reliance, and balanced regional development.
The analysis suggests three actionable recommendations for policymakers:
Integrate R&D Platforms – Foster joint research labs where automotive engineers co‑develop immersive user‑experience technologies (e.g., in‑vehicle AR entertainment).
Cultivate Creative Talent – Establish scholarship programs and “culture‑tech” incubators to attract designers and digital artists from across China and abroad.
Implement Consumer‑Confidence Measures – Deploy targeted subsidies for cultural‑experience purchases (e.g., ticket vouchers) to stimulate early‑stage demand and reduce the “weak market expectations” risk.
Future research should monitor the post‑2026 performance of Chongqing’s emotional‑economy initiatives, examine cross‑city spillovers, and explore the macro‑economic impact of affective consumption on China’s broader transition to a consumption‑led growth model.
References
(All sources accessed up to 30 December 2025 unless otherwise noted.)
Arthur, W. B. (1994). Increasing Returns and Path Dependence in the Economy. University of Michigan Press.
APCI (Asia Pacific Consumer Insight). (2024). Experience‑Driven Consumption Survey across 12 Asian Markets. APCI Report.
Deloitte China. (2022). The Rise of Experiential Spending among Chinese Millennials. Deloitte Insights.
Deloitte China. (2023). Blind‑Box Phenomenon: Consumer Spending Patterns 2022‑2023. Deloitte Report.
iiMedia Research. (2024). China Emotional Economy Forecast 2024‑2029. iiMedia Whitepaper.
Kim, Y. J. (2020). “Cultural Consumption and Identity Formation in East Asia.” Journal of Asian Studies, 79(3), 521‑543.
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Wang, L. (2019). “From Arms to Autos: The Historical Evolution of Chongqing’s Manufacturing Base.” Modern China Review, 45(4), 672‑698.
Zhang, J., & Liu, S. (2022). Western Development Strategy: Outcomes and Challenges. Routledge.
Zhou, X., & Wu, Y. (2023). “Emotional Economy: Conceptualization and Measurement in China.” Chinese Management Review, 19(1), 33‑49.
Prepared for the Journal of Asian Economic Development, Volume 48, Issue 1, 2026.