By 2026, the emotional economy had become a national strategic priority. In January, the State Council General Office issued a work plan aimed at accelerating growth in the service sector, marking the first time "emotional and experiential services" were recognized as a key growth area in a national policy document. Prior to this, the sector was already generating a staggering 2.72 trillion yuan in value, with projections from institutions indicating it could surpass 4.5 trillion yuan by 2029.

This isn't a passing fad; research like the "2025 Young People's Lifestyle Report" confirms the trend is here to stay. The data reveals that 99.9% of young people aged 18 to 35 are willing to pay for emotional value. Local governments are swiftly following suit. Provinces like Hubei and Jiangxi have woven the emotional economy into their government work reports, while Shanghai's action plan to boost consumption specifically dedicates a section to enriching "self-pleasing consumption," covering areas such as stress relief, pet companionship, and niche designer brands.

The operators of these businesses are predominantly small and medium-sized enterprises and individual entrepreneurs. It's safe to say that the emotional economy is becoming a new powerhouse for driving consumption and securing employment.

Every city is eager to seize this opportunity. However, it remains to be seen whether they are grasping a "tailwind" or a "knife's edge," as two contrasting examples illustrate. In the first half of 2023, Xi'an's大唐不夜城 (Great Tang All Day Mall) drew 42.44 million visitors, generating 65.857 million yuan in revenue, which translates to a mere 1.55 yuan per person. The operating company, 曲江文旅 (Qujiang Cultural Tourism), has suffered losses for years: 248 million yuan in 2022, 195 million in 2023, and 131 million in 2024. Despite the massive crowds, packed event schedule, and abundant emotional appeal, profitability remains elusive. In 2025, the attraction is projected to lose between 130 million and 165 million yuan.

Now consider the WEST BUND DREAM CENTER in Shanghai, which focuses on arts, culture, and pet-friendly spaces. In 2025, it welcomed 11 million visitors—significantly fewer than Xi'an—yet its financials are sound. Industry calculations show its operational efficiency is roughly 30% higher than surrounding commercial properties. Both are urban renewal projects chasing the emotional economy trend, yet one loses money despite attracting huge crowds, while the other turns a profit with fewer visitors. Why? The answer: one sells a "check-in" experience, the other sells "daily life."

The Great Tang All Day Mall approached emotion with a "wholesale" strategy—build an impressive attraction and lure in tourists for a visit. In contrast, WEST BUND operates on a "business management" model, focusing on the daily needs of local young people to cultivate repeat business. For urban renewal, the emotional economy cannot be approached with a wholesale mindset. Before any action is taken, two fundamental questions must be answered.

What Kind of Business Is the Emotional Economy?

Let's start with the definition: a consumer decision-making process centered on emotion, where individuals use consumption scenarios to regulate their mood, fulfill emotional and social needs, and achieve self-identity. Note the three key phrases: emotional regulation, social connection, and self-identity—these will recur throughout. To truly understand the emotional economy, we must examine both the demand and supply sides. On the demand side, there's an international pattern: when per capita GDP reaches around $15,000, the consumption structure shifts from being goods-dominated to service-dominated, causing a significant change in consumer attitudes. In the past, Chinese consumption was heavily investment-oriented: buying a house was investing in the future, pushing children was investing in the next generation, and enduring hardship was investing in tomorrow.

Now, with expectations for property appreciation changing, the return on education declining, and more people living alone, this "spending for the future" system is faltering. Since the future feels uncertain, the focus turns to making today better. This has turned the emotional economy into a kind of "emotional ibuprofen" for many. Furthermore, population mobility, the rise of single-person households, and the substitution of online for offline interaction have made people increasingly "atomized," breaking traditional social bonds. Loneliness has become the norm, making emotional consumption a basic need for many, especially the young. On the supply side, the infrastructure for mass-producing emotion is now mature. Personalized flexible manufacturing, algorithm-driven platform recommendations, and rapid AI-generated content form a mature supply chain. A factory can produce hundreds of designs for stress-relief toys on one mold line, turning "satisfaction" into a fast-moving consumer good; fragrance brands use algorithms to categorize emotions into dozens of scent profiles, each with its own SKU for "sleep aid," "healing," or "relaxation."

AI can generate thousands of pet videos daily, precisely feeding every "cloud petter." This means even the most niche emotional needs can be quickly developed into products and distributed accurately. With strong demand and mature supply meeting, the emotional economy has exploded.

What Should Urban Renewal Focus On?

The emotional consumption chain is divided into online and offline segments. Online activity primarily benefits platforms and non-local merchants, while offline activity drives local consumption, local employment, and the local tax base. Urban renewal should clearly focus on the latter. The challenge with emotional consumption is its high degree of spontaneity and low level of planning. For online, this isn't a problem—algorithms are always ready, and it delivers content the moment you feel down. For offline, this is a major issue. If you redevelop based on a specific emotion, that need may have vanished by the time the project is complete. More often, emotions are triggered in specific settings—when someone stumbles upon a patch of lawn to lie on, encounters a market, or comes across an outdoor performance. Therefore, urban renewal should not try to predict emotional needs but rather focus on providing the scenarios where they can emerge. Urban renewal projects have a unique advantage here: they control the largest inventory of underutilized space in a city, making them the biggest potential providers of these scenarios. The most common approach in recent years has been the "grand gesture, big landscape" supply-side tactic, attempting to create demand by building scenery. "Scenario" is hardly a new term, and many urban renewal projects have been using it for years, only to end up "peak on opening day, deserted within six months." Why? Because a scenario is not the same as a landscape. Many projects confuse the two. Landscapes are for viewing; scenarios are for operating. Good scenarios are defined by the people they serve, not the money spent on buildings.

The Emotional Economy Has Three Layers, Focus on the Last One

The first layer is "emotional addition." The product remains the same, but emotion is just a new label attached to it. A stress-relief toy is still a piece of silicone; an electronic prayer bead device is just a small looping speaker; a fragrance can cost 20 yuan more with a "relaxation" tag. These products have the lowest barriers to entry, the thinnest profit margins, and are highly susceptible to price wars. Most players in the emotional economy are still stuck in this layer. The second layer is "emotional pricing." Here, emotion itself becomes the product, and the physical item is merely the vessel—concerts, blind boxes, and paid short dramas. People pay for the anticipation, the thrill, and the dopamine rush. This moves emotion from being a "reason to raise prices" to the "basis for pricing." In 2025, box office revenue for large-scale concerts nationwide reached nearly 30 billion yuan. The third and final layer is "emotional assetization." Emotion is no longer a one-off transaction but accumulates into an asset that can be consumed repeatedly and grown—IP universes, brand communities, and recurring event series. These emotional consumptions become a way to maintain "a relationship." Pop Mart is a prime example. By the end of 2025, it had 72.58 million registered members in mainland China, who contributed 93.7% of its sales, with a repurchase rate of 55.7%. One might think they are selling blind boxes, but its true moat is the emotional ecosystem of an "IP matrix + membership system." The blind boxes are just the front end; the real engine is the long-term emotional value maintained between fans and the IP. It's clear that for the first two layers, the power lies with brands and content companies, not with physical space. Only the third layer—emotional assetization—must be carried by space and offline operations. This is where urban renewal has its home turf. Unfortunately, most urban renewal projects claiming to embrace the emotional economy are still doing the work of the first two layers: bringing in trendy stores, hosting IP pop-ups, and even defaulting to the idea that "emotional consumption equals tourist consumption," making check-ins the core of the project. Once the hype fades, they find themselves back at square one, having accumulated platform traffic rather than offline assets. So how should these scenarios be built? We return to the three key words from earlier: emotional regulation, social connection, and self-identity. These three needs correspond to three distinct scenario-building strategies.

Healing Spaces: Free First, Then Monetize

Consumer surveys from 2025 show that adults aged 30-45 are becoming the main drivers of emotional consumption. They have income, stress, and families. They live locally, and their repeat purchases happen locally. A telling anecdote: there has been a rise in bookings for hourly hotel rooms. Not for anything illicit—they just want a private space for a few hours to read, watch a show, or meditate in peace. People paying for solitude proves the need is real. But in a city, there are far too few places where one can just stay for a while without spending a lot. This type of demand is the most frequent, most spontaneous, and most price-sensitive. So, renewal projects should start with free scenarios and then figure out how to generate revenue from total dwell time. Shanghai's WEST BUND DREAM CENTER provides a good example of this. Located on the site of a cement factory from 1920, its renewal began in 2014 and it opened in 2024. The project prioritized free, "healing" spaces, dedicating 800 meters of riverside to the public. This includes lawns, covered walkways, pet water fountains, and steps for sitting. Public space accounts for over 40% of the total area, with a floor area ratio of only 1.5, compared to the 3.0+ seen in traditional malls. The idea is that if someone is willing to spend an extra half hour in these spaces, they are likely to stay for a coffee, dinner, or a bit of shopping. The free spaces attracted people, and operations quickly followed. 120 merchants opened along the waterfront, with over 400 events held in 2025. Foot traffic exceeded 11 million, and daily sales surged by 96% during its light festival. It's important to note that copying this model is difficult. The WEST BUND project took a decade from start to finish, relying on Shanghai's population density and capital scale. However, the underlying logic is transferable: the heavy assets of a healing space—the public areas—are well-suited for state-owned ownership, while the light operations—content and programming—are ideal for private enterprise. When it opened in 2024, WEST BUND adopted a "state-owned + private" partnership model: the Xuhui district-owned enterprise Xuhui Riverside Group's commercial management company teamed up with a project team from the private firm Hua Zhi Men Capital, creating an integrated development, operation, and content strategy. For projects lacking massive renewal budgets, look at Chongqing's Huangjueping district. A former air-raid shelter used for cooling off was converted into the "Jun Ge Bookstore." Inside a 40-meter-long tunnel, 12,000 books are organized by Chongqing's administrative districts, with old street signs adorning the walls. Starting at just 40 square meters in 2022, it has expanded to over 400 square meters. Its popularity has even spurred nearby residents to open small restaurants, gradually forming a nostalgic community hub. The difficulty with healing scenarios lies not in space design but in institutional design. The question is how to legally and reasonably allow commercial activity in publicly owned spaces like parks, greenbelts, and civil defense projects. Two models offer a path forward. Zhuhai's Xiangzhou district has its "Park Partner" program: recruiting operators from the public, compiling a "list of usable spaces" from park properties, selecting proposals within seven defined business categories, and offering incentives like a 50% rent reduction and a six-month rent-free period. Japan's Park-PFI system offers another reference: publicly recruiting companies to run parks with a 20-year management period, allowing building coverage to increase from 2% to 12%, and letting companies use profits from commercial activities to maintain the green spaces.

Connection Scenarios: The "Reason" is the Foundation

Sociologist Ray Oldenburg coined the term "third place"—a place for informal gatherings that is neither home nor work. This reflects humanity's deep need for real connection. Over the past decade, urban renewal has created countless spaces—malls, streets, creative parks—each more design-forward than the last. But most are "space supply" from the real estate era, not "third places" with connective power. What's the difference? Space is static, built from architecture; connection is dynamic, built from a "reason" to gather. The core of a third place lies in the informal connections between people. The data confirms this. There are over 125 million single-person households in China, and the average household size has dropped to 2.52 people—atomization is accelerating. In the fall of 2025, Shanghai's Citizen Art Night School saw a peak of nearly 950,000 registrations for its courses. All 143 classes sold out in one minute, with the most popular, Basic Squash, gone in 3 seconds. Some have called it "an adult's children's palace." Young people finding "activity partners" (饭搭子, 运动搭子) is the same logic. These are weak ties, but the reason for gathering is specific, turning a vague desire for companionship into a concrete action. Let's look at some examples. Chengdu's Eastern Suburb Memory is a former factory complex transformed into a "third place" for city dwellers. With much more exhibition and performance space than retail, it attracted over 18 million visitors in 2025, an average of nearly 50,000 per day. Over 40% of local young customers are repeat visitors, and more than 80% of its visitors are young and middle-aged adults. The key is making it a "shared reason" for locals to think, "If I want to see an exhibition or hear live music, I go to Eastern Suburb Memory." This relies not just on a high volume of events, but on a sustainable mechanism for providing these "reasons." In 2021, Chengdu Media Group, the asset owner, brought in a professional operator, Eastern Zheng Huo, through a public listing process. This separated ownership from management. The state-owned entity shifted to a role of "supervision, service, and coordination," with performance targets written directly into the contract. This incentive shift refocused the operator's energy from "meeting KPIs" to "creating reasons for people to come." The park now has a dense event schedule across its 20+ exhibition and performance spaces, exceeding 2,500 events a year. A full calendar ensures a continuous stream of connections. The park has also attracted over 90 "first stores" (brands opening their first location in the region). On its opening day, the Brandy Melville Southwest flagship drew over 40,000 visitors and generated over 2 million yuan in sales. Every new store opening is a new "reason" for connection. The earlier example from Chongqing is also relevant. After the success of the Jun Ge Bookstore, the city adopted a "one cave, one strategy" approach to updating its air-raid shelters. This has diversified the "reasons" to visit. A cluster of 18 shelters in Yubei district forms the Hujiayan Cultural Tourism Town, home to a 218-table hotpot restaurant, "Underground City," which is fully booked daily and generated over 35 million yuan in revenue in 2025. Next door is a "basket farmer's market" in another cave. By September 2025, over 20 such projects—including hotpot caves, bookstores, and art bases—had received over 8 million visits. The air-raid shelters have evolved from simple cooling-off spots into some of Chongqing's most distinctive new urban consumption destinations.

Tribe Scenarios: A Content System, Not More Venues

"Self-identification" is the most fundamental form of emotional consumption, but an individual's sense of identity only gains value when recognized within their chosen tribe. As Jean Baudrillard argued in "The Consumer Society," consumption is fundamentally about consuming symbols. People buy not just a product's utility, but the identity, taste, and sense of belonging that comes with it. In other words, you may think you're buying for personal preference, but you're actually purchasing a "membership ticket" to a tribe. This is increasingly evident in China's market. In 2025, the "goods economy" (merchandise related to anime, games, etc.) is expected to surpass 240 billion yuan, a 40% year-on-year increase. The number of "pan-anime" users has reached 526 million, who repeatedly pay for tribal identity. These purchases, which may seem impulsive, follow a very rational underlying logic. A fan might watch a play again because the cast has rotated, see it a third time to collect ticket stubs, or travel across provinces to watch "marathon performances." Every additional viewing enhances their status within the group. Academics call this "subcultural capital"—you accumulate seniority and influence through consistent participation. Over 60% of audience members in 2025 traveled from another city to attend a performance, and "traveling to a city for a show" has become a popular travel style. These identity-driven consumers are inseparable from a physical venue. Consider the transformation of Shanghai's Asia Building. Originally a 21-story office building on Hankou Road in a prime location, it had significant vacancy. Through renewal, it became a "vertical Broadway." This wasn't about creating a vast array of venues; it was about building a comprehensive content system for a specific tribe. The system was built in three steps. The first step was standardizing non-standard spaces. In 2019, Shanghai issued operational standards for "new performance spaces." If a non-standard space in an office building, mall, or park met one of three criteria—theater area, seat count, or annual number of performances—it could be officially designated. With these standards in place, an industry began to incubate. In August 2020, the operator converted a former beauty salon with an expiring lease into a small theater. The immersive musical "Apollonia" began its residency there. By 2021, this model had fostered 16 performance spaces with 2,688 seats, hosting 2,561 performances for nearly 270,000 audience members and generating almost 50 million yuan in box office revenue. The second step was ensuring new content could survive. The space owner, Ya Hua Hu Company, did not charge fixed rent. Instead, it adopted the model of "equity in early production, profit sharing later." If shows sold well, everyone earned more. This was the most critical element. This type of content is typically created by small teams—new plays, new directors, new actors. No one knows if they will be a hit, and they can't handle fixed rent. A profit-sharing model means the venue owner effectively takes on half the risk for them. This allows small teams to enter the market and fosters content diversity, which is essential to match the varied needs of the tribe.