BEIJING — JPMorgan has called the bottom in the Chinese consumer slump, and the firm says now it’s time to buy. Chinese consumers have been reluctant to spend since the Covid-19 pandemic. Retail sales rose by just 3.5% last year , less than half the average of 9.7% in the years 2015 to 2019. But on March 26, JPMorgan’s China equity strategists upgraded consumer discretionary stocks to overweight from neutral. While tariffs and tensions with the U.S. may dent sentiment, the strategists expect Beijing may ramp up consumer stimulus following high-level policy calls to do so. In the meantime, “our analytics show that China’s business cycle for consumption has been bottoming out,” JPMorgan’s chief Asia and China equity strategist Wendy Liu and a team said in the report. They pointed out drivers such as recent trade-in policies, stabilizing stock and property prices , and moderating deflationary pressure due to base effects. The latest earnings results from Chinese companies signal some recovery in consumer spending , albeit still far from pre-pandemic levels except in some niche categories such as gold and popular toys. The JPMorgan analysts expect that in coming weeks, Chinese stocks may rise on better-than-expected earnings growth and increased forecasts. Their China consumer stock picks focus on sub-sectors with fundamental improvements and reasonable valuations. Here are their China consumer plays: Anta Sports — The Hong Kong-listed sportswear brand reported better-than-expected retail sales in February with less of a need for discounting products, according to JPMorgan. Anta owns the rights to Italian brand Fila in China. Mengniu — JPMorgan expects the Hong Kong-listed Chinese dairy giant can likely benefit from China’s efforts to boost the birth rate. Mengniu is headquartered in the Inner Mongolian capital of Hohhot that this month announced subsidies of up to 100,000 yuan per child . However, the company reported a 10.1% drop in 2024 revenue in the face of “intensified pricing competition,” according to an annual report released Wednesday. China Resources Beer — The Hong Kong-listed seller of Heineken in China earlier this month reported sales of the premium beer grew by nearly 20% in 2024 despite a high base the prior year. JPMorgan noted that CR Beer’s management reported a pickup in consumer sentiment in the first two months of 2025 and were confident of delivering stronger earnings growth in the year ahead than in 2024. Tal Education — The U.S.-listed Chinese education company currently operates at a loss, but its margins are set to improve as Tal sells significantly more artificial intelligence-powered educational devices in the next two years, JPMorgan predicts. The company said in January that its AI learning devices are one of its “faster-growing business lines.” The JPMorgan report cautioned that although an official measure of consumer confidence has stabilized after plunging in 2022, it still remains about 30 points below where it was in the 2018 to 2021 period. China’s retail sales rose by 4% in the January-February period versus a year earlier, raising hopes for an improvement in the year ahead. Chinese stocks have pulled back, with the Hang Seng index down more than 1% in the past week as a potential new round of U.S. tariffs loom in early April. However, in the last several days, major investment firms such as Goldman Sachs have noted that investors’ interest in Chinese stocks has reached the highest since a peak in early 2021. JPMorgan last week raised their targets on the MSCI China index to a base case of 80 Hong Kong dollars, up from 67 HKD, for upside of around 6% from Friday’s levels. The index tracks major Chinese companies traded on the mainland, in Hong Kong and the U.S. The strategists upgraded their view on China health-care stocks to overweight from neutral, given optimism over how AI may help biotech companies cut costs. But the firm downgraded Chinese industrial stocks to neutral from overweight due to overcapacity concerns and soft property-related construction demand. — CNBC’s Michael Bloom contributed to this report.