When China’s State Council recently emphasized the importance of “application scenarios” for accelerating new technologies, it signaled more than an administrative adjustment. It reflected the rise of a new economic approach—one shaped not only by supply-side production, but by the interaction between new demand, new scenarios and a new cycle of innovation.
Across China, both consumer behavior and industrial activity are changing quickly. People are looking for more personalized and experience-driven products. Companies are designing solutions based on real situations rather than simply relying on technological capabilities. Together, these trends are creating a new engine of growth that China expects to rely on in the coming years.
This emerging way of thinking is often called China’s “scenario-driven economy,” and its influence is beginning to reach far beyond the country itself.
China’s Consumer Needs are Evolving — And It’s Changing Everything
China’s middle-income population—now the largest in the world—is changing what the market looks like. The old idea of buying only what is “useful and affordable” is giving way to higher expectations and more diverse choices.
Three key trends explain this shift:
First, spending is moving from basic survival needs to enjoyment and improvement of life. While daily necessities take a smaller share of budgets, categories such as healthcare, education, tourism, entertainment, culture and personal development continue to grow.
Second, consumers are focusing more on experiences than on simple products. People want items that express identity, create emotional connection or enhance lifestyle. This is visible in the rise of domestic design brands, customized services and immersive cultural activities.
Third, consumer motivation is becoming more personalized. Trends such as “Guochao” cultural pride, environmental awareness, the silver-haired economy and pet-related consumption all show that people want products matching their individual values.
This shift in demand is influencing entire industries and directing innovation toward new opportunities.
How Real-World Needs Are Driving China’s New Innovations
While demand is driving change, scenarios are what turn this demand into innovation that works in the real world. Policymakers see application scenarios as the missing bridge between research and commercialization. Scenarios allow companies to test new technologies in practical settings, adjust them and then scale them when they prove effective.
The scenario-driven approach relies on three main components:
First, real demand comes before technology. Instead of inventing a technology and then searching for a use, companies begin by identifying real problems, pain points or unmet needs. This increases the chance that solutions will fit the market.
Second, technology acts as an enabler. Some technologies solve problems that older methods cannot, helping create entirely new solutions. Others make existing processes faster and more efficient. Examples include industrial CT scanning used to support precision manufacturing, and wearable devices combined with AI for continuous health monitoring.
Third, ecosystems make scenarios possible. To scale, scenarios need supportive regulations, cooperation across industries, compatible standards and efficient allocation of resources such as talent and capital. While challenges remain—like inconsistent standards or uneven technological capacity—ecosystem coordination is improving.
As scenarios grow and mature, they generate new types of demand, forming a cycle that continues to push innovation forward.
Transforming Domestic Cycle — And What It Means for the Future
For many years, China’s innovation process followed a traditional path: research led to technology, and technology eventually reached the market. But this sometimes resulted in technologies that did not match real demand, leaving innovations stuck before commercialization.
The new model reverses this order. It starts with demand, moves into scenario development, stimulates technological innovation and eventually leads to higher-level demand. This cycle affects every part of the economy.
Production becomes more flexible and tailored to specific scenarios. Distribution channels are adjusted to meet real user needs. Digital platforms and smart logistics improve circulation. Diverse consumption scenarios help unlock new types of spending.
Altogether, this creates a more resilient and efficient economic cycle that emphasizes value over volume.
Beyond China: How Scenario Innovation Influences the Global Economy
As China strengthens its internal cycle, the scenario-driven model is also shaping its international impact. China is gradually moving from being mainly a market participant to becoming a key innovation enabler for the world.
China’s wide range of scenarios—from mega-cities to industrial zones—provides rich environments for testing digital infrastructure, new energy systems, advanced manufacturing, smart mobility, healthcare AI and industrial IoT. Once proven, these solutions often spread to other markets, influencing digital and green development worldwide.
This shift positions China not only as a major player in global supply chains but also as a contributor to new technical and economic models.
China Reform Securities and the Path Ahead: A Short Overview
China Reform Securities, a centrally administered state-owned securities firm, plays a role in supporting this scenario-driven transformation. The company focuses on technological innovation and on serving the real economy. Through its Scenario Lab platform, it helps enterprises and local governments build practical application scenarios, integrate new technologies and explore new development paths.
Scenario Lab has already supported projects in areas such as new materials, intelligent driving and biomedicine across several regions. These initiatives help accelerate the adoption of scenario-based development in different sectors.
China’s emphasis on new demand, new scenarios and a new innovation cycle represents a meaningful shift in its development model. It reflects a move from scale to value, from technology-first to demand-first thinking and from linear to circular innovation. As scenario-based approaches continue to grow, they may shape not only China’s economic future but also contribute to new global models of innovation.