A comprehensive breakdown of China Merchants Securities’ landmark report on the evolution, current state, and future trajectory of China’s pre-owned goods market — with detailed comparisons to US and Japan models.
Executive Summary
China’s secondhand goods market is accelerating at a pace that demands attention. According to China Merchants Securities (CMS) in their July 2026 mesoscopic industry research report, China’s secondhand merchandise transaction volume reached CNY 1.69 trillion (~USD 232 billion) in 2024, expanding 28% year-on-year, with a 12% compound annual growth rate (CAGR) over the past six years. The report, the third installment in CMS’s mesoscopic industry research series, asks a critical question: how much larger can this market become — and what does it mean for China’s broader economy?
This article presents a complete analysis of the CMS report, covering:
- The current tripartite structure of China’s secondhand economy (real estate, autos, consumer goods)
- Historical lessons from the US and Japan — the world’s most mature secondhand markets
- The three enabling conditions that all secondhand booms share
- Why China’s unique manufacturing capacity and labor costs will reshape category composition
- The quantified macroeconomic impact of secondhand trade on GDP, employment, and consumption
- A category-by-category potential assessment
Part 1: Where China’s Secondhand Economy Stands Today
1.1 The Big Picture: CNY 1.69 Trillion and Growing Fast
China’s Ministry of Commerce reports that total secondhand goods transaction value hit CNY 1.69 trillion in 2024, growing 28% year-on-year with a six-year CAGR of 12%. By the end of 2024, China officially launched its secondhand goods circulation pilot program, and the Ministry publicly stated its ambition to build the sector into a “sunrise industry” characterized by innovation, integrity, and green consumption.
Table 1: China Secondhand Goods Market — Key Metrics
| Metric | Value | Notes |
|---|---|---|
| 2024 Total Transaction Value | CNY 1.69 trillion (~USD 232B) | +28% YoY |
| 6-Year CAGR (2019–2024) | 12% | Sustained double-digit growth |
| Online Transaction Growth (2019–2023) | Double-digit annually | Driven by platforms like Xianyu, ATRenew |
| Ministry Policy Status | Pilot program launched end-2024 | Formal government backing |
| Industry Workforce | >10 million people | Over 300,000 physical storefronts nationwide |
The CMS report identifies a clear structural pattern: China’s secondhand economy operates across three distinct tracks — real estate (most mature), automobiles (progressively penetrating), and consumer goods (fastest online growth) — each at a different stage of evolution.
1.2 Real Estate: The Stock Era Has Arrived
China’s real estate market has unmistakably entered a “stock era.” Real estate development investment as a share of GDP peaked in the 2010s and has declined ever since. The traditional growth model driven by incremental new construction has weakened, with the industry pivot shifting decisively from “incremental construction” to “stock revitalization.”
In China’s tier-1 cities, the structural transformation is stark:
Table 2: Secondhand vs. New Housing — Beijing & Shanghai (2024–2025)
| City | Secondhand / New Housing Ratio | Status |
|---|---|---|
| Beijing | ~3.0x | Secondhand absolutely dominant |
| Shanghai | ~3.0x | Secondhand absolutely dominant |
In both Beijing and Shanghai, secondhand residential transactions now outnumber new home sales by approximately three to one — a ratio that continues to rise. This mirrors the trajectory seen decades earlier in the US and Japan.
1.3 Automobiles: New Car Penetration and Secondhand Expansion Coexist
China’s auto market exhibits a dual dynamic: new car penetration continues in lower-tier cities and rural areas, while the secondhand vehicle market steadily expands.
Table 3: China Auto Market — Key Comparisons
| Indicator | China | US | Japan | Global Avg |
|---|---|---|---|---|
| Cars per 1,000 people | ~260 | ~800+ | ~600+ | ~206 |
| Used / New Car Sales Ratio | ~0.6x | ~3.0x | ~1.5x | — |
| 2025 Used Car Transaction Volume | 20.1 million units | — | — | — |
| 2025 Used Car Growth | +2.52% YoY | — | — | — |
China’s 260 cars per 1,000 people exceeds the global average but remains well below mature market levels, suggesting continued new car growth potential in lower-tier markets. Meanwhile, the used-to-new sales ratio of 0.6x — far below the US ratio of ~3x and Japan’s ~1.5x — indicates substantial room for secondhand auto market expansion.
1.4 Consumer Goods: The Online Revolution
China’s non-automotive secondhand consumer goods market has experienced a transformative shift powered by internet platforms.
Table 4: China’s Online Secondhand Market Evolution
| Phase | Period | Key Milestones |
|---|---|---|
| Exploration | 2002 onward | Kongfz.com (孔夫子旧书网) launched — first online used book platform |
| Early Development | 2006–2007 | Physical used goods markets peaked; 39 markets at CNY 100M+ scale; declined after 2007 due to lack of policy support |
| Market Launch | 2018–2020 | Online secondhand trading entered growth phase |
| Standardization | 2021 onward | Government issued guidance policies; ATRenew (爱回收) listed on NYSE June 2021 |
| High-Speed Growth | 2023–present | Online transactions maintain double-digit growth; Xianyu (闲鱼) surpasses 600M registered users, >CNY 1B daily GMV |
Physical used goods markets had a brief golden era in 2006–2007 with 39 markets exceeding CNY 100 million in annual transaction volume each. However, without formal inclusion in urban planning or commercial development plans, these physical markets gradually declined. The internet has since become the dominant channel.
Part 2: Learning from the US and Japan
2.1 The United States: Tied to Economic Cycles
The CMS report traces the American secondhand market through five distinct phases, each tightly linked to macroeconomic conditions and cultural evolution.
Table 5: US Secondhand Market — Historical Evolution
| Phase | Period | Key Developments |
|---|---|---|
| Origins | Late 19th – Early 20th C. | Salvation Army (1897), Goodwill (1902) — charity/religious organizations professionalized secondhand retail, overcoming stigma through standardized sanitization and store management |
| Postwar Prosperity | 1945–1960s | Manufacturing boom, suburbanization, baby boom, credit expansion. Mass consumption of new goods suppressed secondhand demand but accumulated massive future inventory of durable goods |
| Stagflation Surge | 1970s | Oil shocks, deindustrialization, rising inequality. Garage sales and flea markets proliferated. TIME magazine (Jan 1975): “business at flea markets and thrift shops has doubled, even tripled.” Anti-consumerist and environmental movements took root |
| Cultural Reinvention | 1980s | Punk and rock subcultures transformed secondhand clothing into identity markers. Vintage/retro fashion gained cultural cachet beyond economic necessity |
| Platformization | 1995–present | eBay launch (1995) pioneered online cross-regional trading. ThredUp (2009), The RealReal (2011) created vertical platforms. 2008 financial crisis triggered another surge in thrift store openings |
After the 2008 Global Financial Crisis, IBIS World data showed a significant spike in chain thrift store openings — confirming the counter-cyclical nature of secondhand markets.
2.2 Japan: From Luxury Mania to Minimalist Fourth Consumption Era
Japan’s secondhand market trajectory is best understood through the framework of sociologist Miura Atsushi’s “Four Consumption Eras,” which the CMS report uses as its analytical backbone.
Table 6: Japan’s Four Consumption Eras and Secondhand Market Development
| Era | Period | Consumption Characteristics | Secondhand Market Status |
|---|---|---|---|
| First Era | 1912–1945 | Elite consumption, extreme wealth concentration | No meaningful secondhand market |
| Second Era | 1945–1970s | Family-centered mass consumption; rise of middle class; household appliances, cars widely adopted | Massive inventory accumulated but no organized secondhand market yet |
| Third Era | 1970s–1990s | Individualized, brand-conscious luxury consumption. Asset bubble wealth effects. “National luxury fever” | Foundation laid: vast idle assets accumulated during luxury binge |
| Fourth Era | 1990s–present | Middle class polarization. Shift to minimalist, practical consumption. Secondhand acceptance rises sharply | Explosive growth: BookOff founded (1990), Yahoo! Auction (1998), Mercari (2013). Online now 60% of market |
The CMS report provides a particularly compelling data point on Book Off, Japan’s seminal secondhand retail chain:
Table 7: Book Off Historical Revenue (Selected Fiscal Years)
| Fiscal Year | Revenue (¥100M) | Key Context |
|---|---|---|
| FY1992 | 120 | Early establishment |
| FY1995 | 246 | Early growth |
| FY1998 | 504 | Rapid expansion |
| FY2001 | 791 | Post-bubble consolidation |
| FY2004 | 808 | Mature phase |
Book Off’s standardized pricing, quality-controlled inventory, and retail-store presentation transformed secondhand goods from a stigmatized niche into mainstream retail — a model that has influenced China’s own secondhand platforms.
2.3 Where the US and Japan Stand Today: Still Growing
The CMS report emphasizes that both the US and Japanese secondhand markets continue to expand — neither has hit a ceiling.
Table 8: US & Japan Secondhand Market — Current Scale & Growth
| Segment | US | Japan |
|---|---|---|
| Housing (Secondhand / New) | 5–6x (2025: 48.91M existing vs 8.14M new) | ~2.7x (2024: 55,000 existing condo contracts vs ~20,000 new, Tokyo + Kinki regions) |
| Auto (Used / New Sales) | ~3x (2019: 40.8M vs 12.8M new) | ~1.5x (2024: 5.46M vs 3.73M new) |
| Consumer Goods Market (excl. housing & auto) | 2020: $13.96B → 2024: $30.65B → 2030E: ~$40B; 2020–2024 CAGR significantly exceeded 7.0% overall retail growth | 2009: ¥114.4B → 2024: ¥326.3B → 2030E: ¥400B; 2020–2024 CAGR significantly exceeded 2.7% overall retail growth |
The critical finding: in both countries, the secondhand market growth rate has consistently outpaced overall retail sales growth since the pandemic, confirming that secondhand consumption is not a temporary phenomenon but a structural shift.
2.4 The Three Enabling Conditions: A Universal Framework
After analyzing both markets, CMS distills the three prerequisites for a secondhand economy to achieve scaled expansion:
Table 9: The Three Conditions for Secondhand Economy Acceleration
| Condition | Mechanism | Evidence from US/Japan |
|---|---|---|
| 1. Supply — Ample Inventories | Prior high-consumption eras accumulate massive household durable goods inventories, providing sufficient “source material” for secondhand circulation | US postwar boom, Japan’s 1970s–80s bubble consumption; housing ownership >60%, cars >600 per 1,000 people by 1970s–80s |
| 2. Demand — Rationalized Consumption | Economic slowdowns reset income expectations, shifting consumer preferences from “newer-is-better” to “practical and value-driven” | US stagflation (1970s), Japan’s post-bubble middle-class polarization (1990s); anti-consumerism, minimalist movements |
| 3. Channels — Internet + Logistics | Digital platforms eliminate information asymmetry and geographic constraints; logistics networks reduce physical delivery costs | US: eBay (1995), Japan: Yahoo! Auction (1998), Mercari (2013); internet penetration rates accelerated through late 1990s–early 2000s in both countries |
The report’s key insight is that all three conditions must be present simultaneously for a secondhand market to enter its acceleration phase. The US and Japan each reached this trifecta at different times (US: 1970s-1990s, Japan: 1990s-2000s), but the structural pattern is identical.
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