China’s consumer slowdown is not unfolding the way many expected. While wealthier urbanites tighten their belts, spending is rising among lower-income households and residents of smaller cities, reshaping where—and how—money is being spent. Budget destinations like Dali are booming, even as visitors spend less per trip, reflecting what economists call “consumer downgrading.” In this episode, we explore why domestic travel is surging despite caution at the top, how falling savings rates and modest gains among poorer households may be driving new demand, and why interior cities are now outpacing Beijing and other megacities in retail growth. The story suggests that China’s economic future may hinge less on luxury consumption—and more on millions of price-conscious consumers redefining what growth looks like.

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