Goldman Sachs: China Consumer Pulse Check: Still an Unexciting Backdrop; Experiences, Product Cycles, Overseas Demand Driving Growth
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In a report dated January 13, 2026, Goldman Sachs highlighted that China's consumption trends during the fourth quarter of 2025 remained sluggish, carrying a broadly cautious tone into 2026. Key bright spots emerged from experience-related consumption (leisure and dining), high-end and gold jewelry, and overseas demand, driven by structural geographic expansion or cyclical rebounds.
The bank updated its sector preferences: it continues to favor pet food and beverages for long-term growth, upgrading restaurants and ready-to-eat meals from Neutral to top picks, while downgrading diversified retailers from top picks to Neutral. Top Buy-rated stock picks include Dongpeng Beverage, Guming, Midea, Nongfu Spring, Anta Sports, Haitian Flavor, Mixue Bingcheng, Yum China, Laopu Gold, Miniso, Roborock, Mao Geping, Anjoy Foods, Weilong Delicious, and WOPET.
Domestic demand in the fourth quarter of 2025 was generally soft, showing limited sequential improvement. The late timing of the 2026 Lunar New Year might provide a temporary first-quarter sales tailwind for restaurants and sportswear, though several sectors face high-base effects from the first quarter of 2025. The macro team projects real household consumption growth to decelerate slightly to 4.5% in 2026 from 4.8% in 2025.
Goldman Sachs notes that consumer trade-in subsidies have been extended into 2026 but reduced to RMB 250 billion, slightly below investor expectations. Key debates for 2026 include slow but divergent growth, pricing reversals dependent on demand recovery, and margin prospects splitting between mass-market and premium consumption tiers. The bank emphasizes that company-specific product or brand cycles and turnaround stories remain the primary catalysts.