China rental economy and consumer behavior shifts

The rental economy in China is undergoing a significant transformation as young consumers increasingly prioritize usage over ownership. In major urban centers like Beijing, Shanghai, Shenzhen, and Guangzhou, the number of renters has reached nearly 40 million, accounting for almost half the population. This demographic is increasingly viewing renting as a long-term commitment; over half of surveyed renters are willing to stay for five years or more, with 20% prepared to remain for over a decade.

This shift is visible in housing, where tenants are investing personal funds into renovations and decorations to improve daily comfort. Social media trends such as “rental home renovation” have garnered billions of views on platforms like Douyin and Xiaohongshu. Beyond housing, the ‘rent instead of buy’ lifestyle is prevalent among those born after 1995, who represent nearly two-thirds of rental orders. Demand for short-term rentals of digital equipment, including cameras and gaming devices, rose by nearly 67% this summer, while drone rental searches increased more than tenfold.

While the consumer rental market grew over 70% last year, the trend poses challenges to government efforts to stimulate domestic consumption. Despite policies like trade-in programs and interest subsidies, the preference for renting may limit retail growth, which saw social consumer goods retail sales increase by only 0.6% in July. Additionally, the sector faces growing pains, including lack of information transparency, disputes over damage compensation, and discrepancies in advertised pricing.

This movement toward “prioritizing use over ownership” is increasingly mirrored in regional consumer behaviors. In Japan, young people are adopting shared ownership models for luxury vehicles to mitigate costs like depreciation and maintenance, reflecting a broader regional trend of seeking flexibility and cost-effectiveness over traditional asset accumulation.