AI-related exports are supporting China’s industrial production while domestic spending remains weak. Washington and Beijing are returning to negotiations, and tourism is finding opportunities through cinema and emotional value. September’s China Newsletter examines these developments and their implications for brands.
MACRO
AI Exports Keep Factories Busy as Consumers Hold Back
China’s August figures reveal a widening gap between production and domestic demand. Industrial output rose 5.2% year on year, supported by exports of electronics used in AI infrastructure. Retail sales increased just 0.4%, below expectations, while fixed-asset investment fell 7.2% over the first eight months.
Property and automotive continue to weigh on spending: property investment declined 19.9%, and car sales fell 18.5% in August. Excluding cars, retail sales grew 2.5%, matching July’s pace. Urban unemployment, which rose to 5.3%, and higher energy costs add pressure on households and businesses.
Beijing is increasing fiscal support, but its effects will take time. For brands, export strength does not signal a broad consumer recovery. Assortment, pricing and investment decisions need to reflect actual demand within individual categories.
MACRO
US-China Negotiations Put Tariffs and AI on the Table
Scott Bessent and He Lifeng met at JPMorgan’s New York offices ahead of a planned Trump-Xi summit. Discussions aim to preserve and potentially extend the trade truce due to expire in November, which had reduced tariffs and export restrictions.
The agenda includes barriers affecting American energy and agricultural products and the Board of Trade mechanism, which seeks to facilitate trade covering $30 billion in goods from each side. An announcement of new US tariffs over alleged Chinese manufacturing overcapacity was delayed until after the summit.
Artificial intelligence has become another point of friction. Washington accuses Chinese firms of using American models to develop competing products, while Beijing rejects the allegations and has signaled possible retaliation. For international businesses, renewed dialogue creates room for negotiation, but costs, sourcing and technology access remain exposed to policy decisions.
TRAVEL
Cinema Tickets Open the Door to Local Commerce
In China, a cinema ticket can unlock restaurant deals, hotel offers and cultural visits. The three-year “film-plus” pilot, launched across 16 cities and districts, connects interest in films with the local economy, encouraging audiences to continue the experience beyond the screening.
In Guangdong, “Dear You” encouraged visits and interest in the food of Zhongshan and Shantou. In Sichuan, “All Wishes Come True” inspired a trail on Qingcheng Mountain around a 1,900-year-old ginkgo linked to the film. Cinemas are expanding their uses too: a Shanghai Wanda venue increased non-ticket revenue by more than 40% through late-night World Cup screenings.
For brands, cultural partnerships can connect content, retail and hospitality. Strong local partners and credible reasons to explore a destination are essential. Longer visits, repeat customers and spending across categories help assess results beyond discount redemptions.
TRAVEL
Emotional Value Shapes the Luxury Travel Purchase
At Virtuoso Travel Week, Greater China emerged as the network’s fastest-growing origin market, with sales on track to rise 34.4% in 2026. The concept of qingxu jiazhi, or emotional value, captures the importance of feelings and memories in travel decisions. Giving an experience more time, even at the expense of efficiency, can increase its appeal.
Advice remains central. Social media shapes expectations, while AI recommendations can repeatedly suggest the same itineraries. Although 74% of advisors have adopted AI tools, 79% of luxury travelers want an advisor for future trips. Local knowledge and an understanding of individual needs continue to matter.
Small-ship cruising and autumn travel are also growing, while climate affects the booking calendar. For hospitality brands, personal attention, expertise and tailored experiences provide tangible reasons for travelers to choose a premium offer.
