A notable consumption gap exists between urban and rural areas, where income gains in rural regions tend to drive spending far more effectively than in cities. On August 18, the Ministry of Commerce, along with eight other government departments, released the "Guidelines on Further Energizing Lower-Tier Markets and Boosting County-Level Consumption," zeroing in on county regions and offline retail. The document lays out 18 concrete measures across four pillars: refining the county-level business environment, enriching the local supply of goods and services, strengthening consumer safeguards, and improving the integration of key resources.

County areas, which cover roughly 90% of China's landmass, are now emerging as the fastest-growing frontier in consumer spending. At a State Council Information Office press conference on the afternoon of the 18th, Li Jialu, Director of the Department of Circulation Development at the Ministry of Commerce, noted that from January to July this year, retail sales of consumer goods in rural areas grew 2.4% year-on-year, outpacing urban growth by 1.3 percentage points. This marks the 55th consecutive month that rural growth has either matched or exceeded urban levels. Combined sales in county and township markets now account for 39.1% of total social retail sales, up 0.3 percentage points from the same period last year.

Several economists specializing in regional coordination and urban-rural development point to a higher marginal propensity to consume, relatively faster income growth, and a recent wave of migrant workers returning to their hometowns as the key drivers behind the quicker expansion of county and township consumption. However, they also highlight persistent obstacles, including local commercial protectionism, underdeveloped logistics networks, limited employment and income opportunities, and gaps in the social security system.

Wang Lei, a professor at Wuhan University's School of Economics and Management and deputy director of its Regional and Urban-Rural Development Research Institute, told Caixin that the new guidelines offer targeted solutions to these bottlenecks. The critical next step is implementation. Provincial, municipal, and county governments must avoid simply copying the document down the chain, he said. Instead, all levels of government should work alongside businesses to identify specific issues, such as tax revenue sharing, logistics cost allocation, and inconsistencies in law enforcement standards.

Rural Spending Growth Outpaces Urban Centers

At the same press conference, Assistant Minister of Commerce Yuan Xiaoming highlighted that county areas account for roughly 90% of national territory, half of the permanent population, and 40% of economic output. The rising share of county and township consumption in total retail sales, he said, makes it the most significant untapped source of growth for expanding overall spending.

Data from recent national economic reports show that in 2025, urban retail sales of consumer goods reached 432,972 billion yuan, up 3.6%, while rural retail sales hit 68,230 billion yuan, growing 4.1%. The gap has widened further this year: from January to July, urban retail sales rose just 1.1% to 249,285 billion yuan, while rural sales climbed 2.4% to 38,459 billion yuan.

Wang Lei noted that rural consumption has consistently outpaced urban spending since 2023. This trend is underpinned by two factors: first, rural per-capita income starts from a lower base and grows at a faster clip, bolstered by the rural revitalization strategy; second, the marginal propensity to consume is higher in rural areas, meaning any income increase translates into a more significant boost to spending than it would in cities.

Wang also clarified that in national statistics, the "rural" category actually encompasses county-level jurisdictions, including counties, county-level cities, and autonomous counties, excluding municipal districts. This covers a population of roughly 700 million. Public services in these areas are typically funded at rural standards, and their consumption figures are recorded under rural statistics.

Ding Changfa, an associate professor at Xiamen University's School of Economics, pointed to demographic shifts as another key factor. Over the past decades, rural populations flowed steadily into cities, but in recent years, a growing number of migrant workers have returned home. Combined with three consecutive annual increases of 20 yuan per month in pensions for rural and urban residents, the marginal consumption effect of these income gains has been more pronounced in rural areas, fueling the faster growth in rural retail sales.

Breaking Down Bottlenecks in County-Level Consumption

The guidelines concentrate on county regions and physical retail, proposing 18 measures that include attracting domestic and international brands to open regional flagship stores, streamlining business licensing procedures, supporting the upgrade of township commercial centers, promoting job stability and income growth, and encouraging flexible approaches to redeveloping existing land parcels.

Wang Lei explained that county-level commerce often suffers from a lack of competition and high logistics costs, driven by sparse distribution points, difficult delivery, and significant product waste. This creates a vicious cycle of limited supply, higher prices, and suppressed consumption. The new guidelines aim to break this pattern.

On the logistics front, the document calls for better planning of commercial distribution infrastructure, unified construction and management standards, deeper cooperation between postal services and express delivery, and the integration of passenger and freight transport in rural areas. It also pushes for a more robust logistics system for agricultural products, including support for origin warehouses, centralized collection and distribution centers, cold-chain storage, and farm-gate markets.

On competition, Wang observed that many county governments, constrained by limited tax revenues, tend to protect local taxpayers by erecting barriers to outside retailers, resulting in poor service quality and fewer choices for consumers. The guidelines now urge chain operators to accelerate their expansion into lower-tier markets by simplifying approval processes, encouraging "one license, multiple locations," and explicitly prohibiting any explicit or implicit obstacles to cross-regional operations.

Looking at the internal challenges facing counties, Ding Changfa noted that most have weak industries, shrinking populations, limited job opportunities, and low incomes. Revitalizing county consumption, he argued, requires more than just expanding the variety and quality of goods on the supply side. The bigger priority is addressing employment and income in rural areas, closing gaps in education, healthcare, and elderly care services, and strengthening the overall safety net to reduce the urban-rural divide in public services.

To that end, the guidelines focus on two areas: stabilizing jobs and supporting entrepreneurship and housing. Specific measures include encouraging corporate headquarters or platform companies to set up operations and business units in suitable counties to expand employment capacity; coordinating support for migrant workers seeking jobs outside their hometowns while also backing those who return to start businesses; streamlining the "one-stop" process for starting a business in county areas; encouraging county governments to build rural business incubators tailored to local conditions; and implementing city-specific policies to support housing needs for families with multiple children.