Total retail sales grew 3.7% in 2025, trailing both GDP growth and household income growth for the second year running. Nearly 60% of the country’s top 100 retail chains saw store counts stagnate or shrink. New openings of shopping malls in China fell to a 13-year low in 2025, down 24% from the year before.
While these stats paint a picture of the end of the mall era, the reality could not be further from it. Average daily foot traffic at shopping malls rose 5.3% year on year. Premium operators like CR Land (华润置地) grew shopping mall rental income 13.3% in 2025, more than three times the pace of national retail sales (3.7%). Demand is being redistributed toward malls that give people a reason to come. Shopping malls in China are splitting into those that have built a new identity and those that have not. This article looks at what is driving that split.
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Comparison of shopping malls across the globe
That situation is all the more paradoxical because, by international standards, China is not over-served in terms of shopping malls per capita (even if we restrict the comparison to the urban population only). International data are not harmonized (on the definition of shopping malls). This makes the comparison difficult, but even with imperfect data, we can conclude that China is among the least-served large economies in terms of malls per million inhabitants. When we compare to Japan or France, for instance (comparison with the US is trickier because of its own classification of malls), China ranks lower. When putting those contradictions in perspective, the question seems less about oversupply. It will be more about what value proposition malls need to offer in China and what brands should initiate with shopping malls in China.
Shopping malls in China are becoming experience centers
Prime retail stock across 15 major tracked cities hit 116.7 million square meters by mid-2025. The pace of development has slowed sharply. Only around 360 projects opened in 2025, the lowest count since 2013, and nearly one in five of those were renovations of existing properties rather than fresh builds.
The aggregate vacancy rate for prime retail across 15 major cities stood at 11.1% in mid-2025. A level that signals pressure rather than crisis. The real split shows in the direction each segment is moving. WinShang’s tracking of 600+ benchmark malls puts their collective vacancy at a five-year low, below 9%. City-level data splits further.
Shanghai recorded a vacancy rate of 9.23% in Q4 2025, a record low. Shenzhen saw vacancy decline for six consecutive quarters. Chengdu moved the other way, rising 2.9 percentage points to 8.93% as new supply outran absorption. The national headline number smooths over variation that brands and operators cannot afford to overlook.
Inside those malls, the tenant mix tells the clearest story about where spending is going. Food and beverage operators posted an open-to-close ratio of 1.41 in 2025. This means for every 100 closings, there were 141 openings. The same ratio of culture, sports, and entertainment came in at 1.70, while apparel moved in the
opposite direction, with increasing closures. The contracting categories represent consumption easily replaced by e-commerce. Overall, malls are adapting to the consumer drive for experiences, shaping the purpose of malls as culture and experience centers.
E-commerce has plateaued, and physical retail is growing again
The assumption that e-commerce would keep pulling spending away from physical stores runs into a more complicated set of numbers. Online retail’s share of
consumer spending has been easing back, slipping from 27.6% in 2023 to 26.1% in 2025. In H1 2025, out-of-home consumption grew 8.7% over the same period. The promotional mechanics that powered e-commerce’s earlier surge- flash sales, manufactured urgency, and multi-step discounts- have lost their pull as consumers adapted to year-round low prices. During the 2025 618 shopping festival, major platforms dropped complex discount mechanics in favor of straight price cuts.
Three things make physical retail’s position in China different from elsewhere
Chinese consumers treat shopping as a social activity. A mall visit that generates RedNote (小红书) content creates reach the brand does not pay for. Government policy has deliberately positioned commercial districts as inbound tourism stops. Duty-free stores have expanded into city centers in Shenzhen, Guangzhou, and Xi’an.
Shopping malls in China are tourist destinations
China’s inbound and domestic tourism rebound is adding a structural second consumer base to high-tier city malls, one that operates outside local catchment areas. In 2025, inbound foreign arrivals reached 154.5 million, with total spending at USD 131.1 billion, up 39.2% year on year. Domestic travel broke its own record: 6.522 billion trips in 2025, with total spending reaching RMB 6.3 trillion, up 9.5%.
The two flows reach malls through different routes. For foreign visitors, policy has done much of the work. The government has expanded downtown duty-free stores into commercial districts in Shenzhen, Guangzhou, and Xi’an, positioning malls as a deliberate stop in the inbound tourist experience. The numbers reflect this: tax refund goods sales rose 95.9% in 2025. Shanghai, which received a record 9.36 million inbound visitors, saw its tax-refund sales rise about 80% for the year.
Domestic tourists follow a different logic. When tens of millions of visitors arrive in a city over a long holiday, flagship malls absorb a share of that crowd directly. Commercial districts in tourist destination cities like Changsha and Chongqing see stronger sales each time the holiday calendar turns, as out-of-city visitors treat landmark malls as a destination.
In major cities and popular tourist destinations, malls with genuine tourist draw run on two demand cycles at once: local residents provide a base, and visitor flow adds on top, peaking during holidays. For brands and operators assessing which malls to
enter, tourist draw represents a demand source that runs independently of local consumer sentiment. A mall drawing significant tourist traffic maintains foot traffic on a cycle that does not track local economic conditions. In a period when domestic confidence has been subdued, that is a structural resilience the numbers reflect.
Shopping malls in China have become social destinations
What is happening inside China’s better-performing malls is not a story about retail surviving e-commerce; rather, it is a story about inventing a new value proposition. The clearest evidence comes from what renovation delivers. Xincheng Wuyue (新城吾悦) spent nearly RMB 50 million on the third renovation of its mall in Haikou, the capital of Hainan province, rebuilding it around first-store brands, exhibitions, and live events. The result indicates that the relaunch drew 300,000 visitors in two days, with a single-day record of 160,000 visitors and RMB 15 million in sales.
Social platforms multiply the effect. Each month, 170 million users turn to RedNote (小红书) for purchasing advice, and comments asking where to buy a featured item reach 80 million. A mall that produces shareable content through IP exhibitions and pop-up events builds reach it does not pay for separately. Every documented visit works as a prompt for someone who was not there. The harder question is monetization. Turning that reach into tenant sales and rent depends on tenant mix, membership capture, and visit-to-sale tracking, and few operators measure this well.
The Chinese people still have money to spend; the question is how to unlock it
China’s retail sales grew 3.7% in 2025, but per capita disposable income grew 5.0% over the same period. The gap between the two points to a structural pattern that predates recent economic softness. By September 2025, household bank deposits had reached about RMB 165 trillion, more than 120% of annual GDP and double the roughly RMB 82 trillion held in 2019. In the final quarter of 2024, 61.4% of consumers told surveyors they preferred saving to spending, against just 24.9% who favored spending more. Private consumption accounts for around 40% of GDP in China, compared to 68% in the United States. The spending potential is not absent. It is sitting in deposit accounts, accumulating faster than consumers have found reasons to deploy it.
It also matters where that spending goes. Services consumption grew 4.5% in 2025 and now accounts for 46.1% of total household expenditure, outpacing goods across every income tier. Dining, entertainment, and social experiences are the categories pulling money off the sidelines. They are also the categories filling the floor space of the malls with the lowest vacancy rates.
| Year | GDP Growth (YoY %) | Real Disposable Income Growth (YoY %) |
| 2015 | 6.9% | 7.4% |
| 2019 | 6.1% | 5.8% |
| 2024 | 5.0% | 5.1% |
| 2025 | 5.0% | 5.0% |
| 2026E | 4.6% | 4.1% |
| 2027E | 4.5% | 4.5% |
| 2028E | 4.3% | 4.7% |
| 2029E | 4.1% | 4.0% |
Some malls are struggling, others are thriving; here is what separates the two groups
The split in China’s mall market is widening. CR Land’s (华润置地) 98 shopping centers in operation generated RMB 21.9 billion in rental income in 2025, up 13.3% year-on-year, on 97.4% occupancy. Longfor (龙湖) shows the same pattern. Its 99 malls brought in RMB 11.21 billion of rental income in 2025 at 97% occupancy, with tenant sales and daily foot traffic both up more than 15%. The recurring businesses built on those assets carry gross margins above 50%, against the 6.1% Longfor(龙湖) earned on property development in 2024.
These are not one-off results from a good year. A market that generates this kind of rental growth alongside persistent closures elsewhere is not in collapse. The operators performing well share a consistent approach: each has built malls around a proposition that online channels cannot replicate, such as tourist draw, social programming, experiential tenants, or a food and beverage offering that generates return visits outside the retail cycle.
The malls that stay full are the ones people visit out of habit. The ones losing tenants never earned that place in anyone’s routine. For brands, this makes location
selection more consequential than it has been in years. Two malls in the same city can now sit on opposite ends of the vacancy and rental spectrum, and being in the right one is a different decision from simply being in malls.
Key takeaways on shopping malls in China
- There are clear winners and losers in China’s shopping mall market, but what’s evident is that China’s mall culture is here to stay. The real divide is not premium versus mid-tier, or strong cities versus weak ones. It runs between operators who built a distinct identity for their properties and those who did not.
- Tourism has become a structural layer of demand for high-tier city malls. Inbound foreign arrivals spent USD 131.1 billion in China in 2025, and domestic trips hit a post-pandemic record of 6.5 billion. This is demand no online platform can capture. A mall in the path of that traffic runs on two demand cycles at once, and the tourist cycle does not move in lockstep with local consumer confidence.
- Physical retail is holding ground on things a screen cannot provide: a social context, the ability to experience a product before buying it, and a venue worth making the trip for. The more interesting question now is how operators use that advantage before the next wave of digital innovation narrows it again.
- Investment in experience is starting to produce measurable returns. Xincheng Wuyue’s RMB 50 million renovation in Haikou, Hainan converted directly into record reopening traffic and sales. The open question for operators is conversion: how footfall, dwell time, and social media reach translate into tenant sales and rent. Operators who measure that link will make better renovation decisions than those who chase traffic alone.
Author: Matthieu David, edited by Allison Malmsten and Ming Yii Lai, with additional research by Zekai Zhang
