How AI Is Powering China’s Trillion-Yuan Emotional Economy
A quiet revolution is reshaping how Chinese consumers spend their money. It is no longer just about what a product does or how much it costs — increasingly, it is about how it makes them feel. This shift has given rise to China’s “emotional economy” (情绪经济), a market valued at 2.72 trillion yuan in 2025 and projected to exceed 4.5 trillion yuan by 2029, according to iiMedia Research. And at the heart of this transformation lies artificial intelligence.
In a recent expert commentary published by Guangming Daily and syndicated by Xinhua News Agency, Professor Li Fan of Shenzhen University argues that AI is emerging as a “new variable” in the emotional economy — one that is fundamentally changing how businesses understand, respond to, and fulfill human emotional needs at scale.
What Is the Emotional Economy?
The emotional economy is an emerging economic form centered on the creation and circulation of emotional value. Unlike traditional consumption focused on utility and price-performance ratio, this new paradigm prioritizes the feelings, psychological satisfaction, and sense of belonging that consumers derive from products and services.
As Professor Wang Like of Lanzhou University of Technology explained in an earlier Xinhua report, the emotional economy “helps consumers achieve emotional restoration while realizing economic value” through symbolized goods and services oriented toward emotional value.
The numbers tell a compelling story. China’s emotional economy grew from 2.31 trillion yuan in 2024 to 2.72 trillion yuan in 2025, with a projected compound annual growth rate of roughly 12%. The AI toy market alone saw online sales reach 7.4 billion yuan in 2025 — a staggering 427.4% year-over-year increase — with approximately 1.6 million units sold, according to Magic Mirror Insights.
Three Trends Reshaping the Landscape
Li Fan’s analysis identifies three transformative trends driven by AI’s integration into the emotional economy.
From one-time pleasure to continuous companionship. Traditional emotional consumption — buying a cultural creative product or attending an immersive experience — typically delivered short-lived satisfaction. AI-powered smart toys, virtual characters, and digital assistants now enable ongoing emotional interaction in daily life, creating persistent relationships rather than fleeting transactions.
From youth-centric to all-age services. While emotional consumption was once seen as a young person’s phenomenon, it is rapidly expanding across demographics. AI companions now serve children needing educational support, students requiring psychological guidance, professionals managing workplace stress, and elderly individuals seeking daily companionship and care.
From standardized services to personalized precision. Traditional emotional services often suffered from a “one-size-fits-all” problem, dependent on staff experience or fixed processes. AI enables services to identify individual preferences and needs with unprecedented accuracy — what Li Fan describes as “a key for every lock.”
Policy Backing and Social Impact
The emotional economy has received significant policy attention in 2026. In January, the State Council issued a work plan explicitly supporting the construction of emotionally-driven and experiential service consumption scenarios. Zhejiang and Jiangxi provinces have incorporated “emotional economy” and “self-pleasing economy” into their 2026 government work reports.
Li Fan argues that AI-powered emotional services will drive positive change across three critical areas: mental health services (where AI enables forward-deployment of daily emotional support), community-level work (where AI acts as a sensitive “antenna” detecting overlooked emotional needs), and social public policy (where AI helps connect fragmented needs for aging-friendly renovations and youth care initiatives).
The Road Ahead
Despite the promise, Li Fan offers a measured perspective. “The emotional economy may seem like a consumption issue,” he writes, “but in essence, it is about how people gain understanding, companionship, and support.” He outlines three guiding principles for healthy development: human-centered design where AI serves as a “helper” not a “replacement,” value guidance and risk prevention to avoid emotional dependency, and universal access through integration into schools, communities, elderly care, and workplace wellness programs.
As China’s emotional economy continues its rapid expansion, the question is no longer whether AI will play a role — but how to ensure that role serves human flourishing rather than mere commercial gain. The answer, as Li Fan suggests, lies not in how advanced the technology becomes, but in whether it truly makes people’s lives better.
This article is based on expert commentary by Li Fan (Professor and Deputy Director, China Center for Special Economic Zone Research, Shenzhen University) published in Guangming Daily on June 22, 2026, and syndicated by Xinhua News Agency.