One movie has been on everyone’s lips in China this year: Ne Zha 2. It has become the highest-grossing film in China ever, racking up more than $2 billion—the first non-Hollywood movie to do so. It’s also the biggest animated movie in history (surpassing Inside Out 2).
Beyond the superlatives and eye-catching numbers, the film has come at a critical time for the world’s second-largest economy. Gripped by an escalating tariff war with the United States, Chinese President Xi Jinping has vowed to “fully unleash” the country’s consumption potential.
The smash hit illustrates what Beijing is hoping for as a growth engine, in the face of slowing exports. On March 5, when Premier Li Qiang kicked off the annual meeting of the National People’s Congress, he made clear that the government’s top priority this year is boosting consumer spending—a pivot from past years’ focus on modernizing industry and technological self-reliance. Chinese leaders have long been hesitant of direct cash handouts to households, due to Xi’s skepticism of “welfarism” and belief in fiscal discipline, given the country’s high debt levels. But consumption is increasingly being seen as vital, as U.S. President Donald Trump heaps more tariffs on China and other nations.
As officials look for ways to drive domestic demand, the extraordinary success of Ne Zha 2 shows that Chinese consumers have an appetite for high-quality homegrown products. From 2009 to 2012, an average of 5.5 of the top 10 films released in China were from Hollywood. By 2023 and 2024, none were—all top 10 titles were local. There’s a similar shift underway in other culture industries.
Black Myth: Wukong, an action-adventure video game developed wholly by a Chinese studio, was an instant blockbuster on its release in August 2024 and became one of the best-selling titles on PC platform Steam globally last year—driven mostly by domestic Chinese sales. Both Ne Zha 2 and Black Myth: Wukong are unapologetically Chinese, deriving their lore from traditional mythology and 16th-century classics. And both have sparked wider consumption beyond theaters and off PC screens, from tourism to Pop Mart collectibles to gaming-themed hotels.
With China curbing imports of Hollywood films in retaliation for U.S. tariffs, there will likely be a growing number of cultural hits that are distinctly Chinese at heart—domestically produced, targeted, and consumed. (Of Ne Zha 2’s global gross, more than $1.97 billion has come from China alone, and the movie was barely promoted overseas outside Chinese diaspora audiences.) Some of which, like Black Myth, may resonate beyond the local market, exporting China’s soft power.
This sea change could mark a new chapter in the Chinese government’s stance toward the private sector, including not just Big Tech but also the entertainment industry. Xi’s February symposium with top Chinese CEOs and March meeting with foreign business leaders stoked confidence that the era of regulatory crackdowns is over. It also suggests that Xi is, at last, accepting the importance of consumption and private enterprise, giving a freer hand to grassroots, bottom-up innovation after DeepSeek’s AI breakthrough and Ne Zha 2 showed a bigger impact than any top-down approach.
Policymakers are waking up to the idea that stimulating consumer spending is more than just a question of demand—supply matters. A consumption action plan issued by the Central Committee and the State Council on March 16 outlined measures not only to stabilize the stock and real estate markets but also to promote service sectors including online gaming, esports, and animation. Moviegoers splashing out on Ne Zha 2 have shown that people do want to spend—but only on things worth spending their money on. Increasingly, Chinese consumers are splurging on experiences instead of goods. During this year’s Lunar New Year holiday, they spent 12 percent more on services than the year before, including an 84 percent jump in creative services such as cultural performances.
Certainly, China has the talent and capital to craft impressive experiences and products. Loosening the collar around tech and culture industries will give them room to breathe, be creative, experiment, and meet Chinese consumers at where they are. And even the slightest increase in spending would be a boon for economic growth.
Household consumption in China accounts for about 40 percent of the economy, compared with 56 percent in Japan and nearly 70 percent in the United States. With Chinese officials steering clear from cash handouts—for fear of creating a welfare state it can’t afford—the best playbook for getting people to spend can be seen in the trajectories of Ne Zha 2, Black Myth, DeepSeek, lifestyle app RedNote, and the like: quality products and experiences.
Nationalist pride fueled by Ne Zha 2 has also revived domestic optimism about China’s future after a few years of malaise: that it will be resilient in the face of structural economic problems at home and an escalating trade war with the United States. A recent survey by Deutsche Bank showed that consumer sentiment in China improved sharply from last year, with 60 percent anticipating an income increase in the year ahead. Chinese stocks have also been on a tear, with the Hang Seng Index outperforming the S&P 500 by the most since 2009. And while Trump’s tariffs remain a big overhang, these early signs indicate that Beijing’s efforts to cultivate consumption are starting to pay off.
Amid its kinetic intensity and spectacular visual effects, the film has resonated with some as an allegory. In Ne Zha 2, the titular protagonist initially seeks to join a righteous demon-slaying sect and ascend to immortal status. But by the end of the movie, divine immortals that claim to be a “beacon of light for the world” turn out to be full of hypocrisy; demons initially viewed as evil are actually exploited. Ne Zha, who is an ugly, misunderstood demon child, eventually eschews becoming an immortal and takes destiny into his own hands.
Some visual details have stirred debate online: In particular, the headquarters of the immortal sect has a shape akin to pentagon and all-white; its green identity jade plaques remind some of green cards issued in the United States; and the immortal’s cauldron that converts demons into elixirs features patterns vaguely reminiscent of the U.S. dollar sign. Some commentators have interpreted this as a veiled satire of U.S. hegemony, with echoes of how the United States excessively demonizes China and exercises double standards on international rules, and in this vein, China—like Ne Zha—will rise up despite attempts to repress it.
Though such parallels might require somewhat esoteric readings, for now the Chinese mythical boy is beating an American Avenger at the box office. When I went to the movies in Dongguan, China, seats for Ne Zha 2 were all sold out, while Captain America: Brave New World was playing to near-empty theaters.
Whether Chinese consumers will keep spending after Ne Zha 2 depends on how long this celebratory fervor and renewed optimism can last. The policy prescriptions to boost consumption are costly, will take time to work, and face resistance from cash-strapped local governments. But as the trade war heats up, Xi finally seems ready to unleash the spending power of China’s vast middle class.
The post The Cartoon That Shows China’s Bet on Consumption appeared first on Foreign Policy.
