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The Key to Boosting Consumption Lies in Recognizing Individual Needs

Mar 13-2026   



*This article is compiled based on a report published by The Paper.

The Concealed Domestic Demand

For a long time, we have been accustomed to using "averages" to outline market fundamentals. In an era of supply shortages, when the focus was on "availability", this approach was effective because consumer demand was highly convergent: everyone needed a refrigerator or a car for commuting, for example. However, as the report points out, in today's era of material abundance, "averages" are becoming ineffective, obscuring the specific nuances of genuine individual needs.

Demands related to aesthetics, emotional resonance and specific experiential scenarios often remain "invisible" in traditional statistical tables. They are typically non-standardized, fragmented and fluid. The report contends that these "invisible demands" precisely constitute the greatest variable for future growth in China's domestic demand.

However, without discovery mechanisms, these needs have remained silent for a long time, even remaining unarticulated by consumers themselves. This has created the greatest pain point in the current economy: a mismatch between supply and demand.

On the one hand, consumers have disposable income, but struggle to find products that resonate with them emotionally. This means that their willingness to spend diminishes. On the other hand, businesses, unable to perceive these niche demands, resort to producing generic mass-market goods based on experience, thereby falling into the trap of homogenous competition and price wars.

Breaking the Vicious Cycle of Involution

"Involution" has become a frequent term in recent years' business discourse. If "invisibility" is the root cause of sluggish domestic demand, then "involutionary" cut-throat competition is its consequence.

Why does involution occur? Fundamentally, it stems from competition in a single dimension. When enterprises cannot differentiate themselves to satisfy users, they are forced into "price wars". All players slash costs, sacrifice profits and compromise quality in order to "trade price for volume". This zero-sum game has no winners: enterprises lose capital for innovation, consumers receive substandard goods and the entire supply chain becomes mired in a cycle of low standards.

Every day, tens of millions of users share photos of their outfits, meals and travels on rednote. These seemingly trivial user-generated content (UGC) posts are, in fact, high-frequency, authentic and immensely valuable "demand signals".

The report summarizes this mechanism as the "demand-side cycle": users articulate their unmet needs and desires through documentation and sharing, and these are then connected to broader audiences via algorithms and social networks, thereby sparking new collective consumption trends.

For the supply side, this represents an entirely new survival strategy. When enterprises stop focusing on competitors' price cuts and start addressing users' "pain points in daily life" to improve products, a blue ocean emerges. This is the core logic of the "lifestyle economy," as defined in the report, which starts with concrete life needs and drives a bidirectional cycle of demand and supply interaction.

Under this model, enterprises stop producing blindly and instead engage in C2B (consumer-to-business) reverse customization based on "lifestyle signals". This drastically reduces trial-and-error costs and confers pricing power upon enterprises: consumers are willing to pay a premium for products that understand their lives and deliver emotional and aesthetic value.

This is precisely the micro-level manifestation of the "high-quality development" that the state has repeatedly emphasized--breaking the deadlock of low-price competition by providing superior, better-matched supply.

Bring the Economy Back to "Real People"

From a macro perspective, the value of the recently released 2026 Lifestyle Economy Report lies in its explanation of the commercial logic of internet platforms and its provision of an immensely valuable reference model for China's economic transformation.

Lifestyle communities such as rednote essentially construct a decentralized demand discovery mechanism by making ordinary people's lives visible. This mechanism is strategically significant for boosting domestic demand.

Firstly, it enhances the resilience of domestic consumption. Secondly, it promotes circulation within the real economy. Thirdly, it has the potential to reshape social confidence. Ultimately, economic vitality stems from people's expectations for the future. When individuals witness the vibrant lifestyles of others within communities, it sparks a deeper aspiration beyond mere consumer desire: "I wish to live better too". This social psychology, oriented towards improvement, constitutes the most profound driving force behind economic recovery.

As Huang Yiping, Dean of Peking University's National School of Development, observes, a thriving lifestyle economy can better support sustainable economic growth at the macro level. At the micro level, it represents the lofty aspiration to fulfill people's ever-growing demand for a better life.

In essence, a genuine lifestyle economy means returning commerce to its fundamental purpose of serving people. When producers, brands and enterprises focus on "specific individuals", respect diverse aesthetics, respond to varied needs and fulfill aspirations, they are not only countering involution, but also forging a new path to invigorate China's domestic demand.


The Key to Boosting Consumption Lies in Recognizing Individual Needs

Mar 13-2026   



*This article is compiled based on a report published by The Paper.

The Concealed Domestic Demand

For a long time, we have been accustomed to using "averages" to outline market fundamentals. In an era of supply shortages, when the focus was on "availability", this approach was effective because consumer demand was highly convergent: everyone needed a refrigerator or a car for commuting, for example. However, as the report points out, in today's era of material abundance, "averages" are becoming ineffective, obscuring the specific nuances of genuine individual needs.

Demands related to aesthetics, emotional resonance and specific experiential scenarios often remain "invisible" in traditional statistical tables. They are typically non-standardized, fragmented and fluid. The report contends that these "invisible demands" precisely constitute the greatest variable for future growth in China's domestic demand.

However, without discovery mechanisms, these needs have remained silent for a long time, even remaining unarticulated by consumers themselves. This has created the greatest pain point in the current economy: a mismatch between supply and demand.

On the one hand, consumers have disposable income, but struggle to find products that resonate with them emotionally. This means that their willingness to spend diminishes. On the other hand, businesses, unable to perceive these niche demands, resort to producing generic mass-market goods based on experience, thereby falling into the trap of homogenous competition and price wars.

Breaking the Vicious Cycle of Involution

"Involution" has become a frequent term in recent years' business discourse. If "invisibility" is the root cause of sluggish domestic demand, then "involutionary" cut-throat competition is its consequence.

Why does involution occur? Fundamentally, it stems from competition in a single dimension. When enterprises cannot differentiate themselves to satisfy users, they are forced into "price wars". All players slash costs, sacrifice profits and compromise quality in order to "trade price for volume". This zero-sum game has no winners: enterprises lose capital for innovation, consumers receive substandard goods and the entire supply chain becomes mired in a cycle of low standards.

Every day, tens of millions of users share photos of their outfits, meals and travels on rednote. These seemingly trivial user-generated content (UGC) posts are, in fact, high-frequency, authentic and immensely valuable "demand signals".

The report summarizes this mechanism as the "demand-side cycle": users articulate their unmet needs and desires through documentation and sharing, and these are then connected to broader audiences via algorithms and social networks, thereby sparking new collective consumption trends.

For the supply side, this represents an entirely new survival strategy. When enterprises stop focusing on competitors' price cuts and start addressing users' "pain points in daily life" to improve products, a blue ocean emerges. This is the core logic of the "lifestyle economy," as defined in the report, which starts with concrete life needs and drives a bidirectional cycle of demand and supply interaction.

Under this model, enterprises stop producing blindly and instead engage in C2B (consumer-to-business) reverse customization based on "lifestyle signals". This drastically reduces trial-and-error costs and confers pricing power upon enterprises: consumers are willing to pay a premium for products that understand their lives and deliver emotional and aesthetic value.

This is precisely the micro-level manifestation of the "high-quality development" that the state has repeatedly emphasized--breaking the deadlock of low-price competition by providing superior, better-matched supply.

Bring the Economy Back to "Real People"

From a macro perspective, the value of the recently released 2026 Lifestyle Economy Report lies in its explanation of the commercial logic of internet platforms and its provision of an immensely valuable reference model for China's economic transformation.

Lifestyle communities such as rednote essentially construct a decentralized demand discovery mechanism by making ordinary people's lives visible. This mechanism is strategically significant for boosting domestic demand.

Firstly, it enhances the resilience of domestic consumption. Secondly, it promotes circulation within the real economy. Thirdly, it has the potential to reshape social confidence. Ultimately, economic vitality stems from people's expectations for the future. When individuals witness the vibrant lifestyles of others within communities, it sparks a deeper aspiration beyond mere consumer desire: "I wish to live better too". This social psychology, oriented towards improvement, constitutes the most profound driving force behind economic recovery.

As Huang Yiping, Dean of Peking University's National School of Development, observes, a thriving lifestyle economy can better support sustainable economic growth at the macro level. At the micro level, it represents the lofty aspiration to fulfill people's ever-growing demand for a better life.

In essence, a genuine lifestyle economy means returning commerce to its fundamental purpose of serving people. When producers, brands and enterprises focus on "specific individuals", respect diverse aesthetics, respond to varied needs and fulfill aspirations, they are not only countering involution, but also forging a new path to invigorate China's domestic demand.