You are here

China's 770m middle-class aspirants boon to consumption

Thursday, March 10, 2016 - 07:44

shanghair.jpg
China's working population - 770.4 million people - is the largest in the world. But the middle class that dominates its consumer market still only accounts for a tiny fraction of that number: less than 2 per cent of workers earn enough to pay income tax, according to Goldman Sachs.

[SINGAPORE] China's working population - 770.4 million people - is the largest in the world. But the middle class that dominates its consumer market still only accounts for a tiny fraction of that number: less than 2 per cent of workers earn enough to pay income tax, according to Goldman Sachs. 

The creation of at least 10 million urban jobs - one of the goals announced at the National People's Congress - would affect only a small proportion of the population, but would still mean a considerable boost to the size of the middle class. So while China's taste for luxury goods may attract more attention, the country's appetite for staples says more about daily life for most people.

Here is a snapshot of how Chinese consumers are living today. 

Most Chinese still earn and spend much less than Americans

sentifi.com

Market voices on:

Beijing recently overtook New York as the 'Billionaire Capital of the World' and country-to-city migration is at its highest level in recent history. 

But China's average annual wage was 56,360 yuan (S$11,966) in 2014, and Goldman Sachs estimates that 387 million rural workers - half the working population - earn about US$2,000 a year. The average Chinese consumer spends US$7 a day, according to Goldman Sachs. Food and clothing make up nearly half of all personal spending, with 9.2 per cent allocated to recreational activities like travel, dining out, sports and video games.  The average American spends US$97 a day, 17.3 per cent of it on recreation.

Families are smaller than ever before

There were less than three people in the average Chinese family home in 2014, down from about five in the 1950s. Gender imbalance in China is also the worst in the world: about 116 boys are born for every 100 girls, against a global average of 107 boys to 100 girls.

Between 1979 and late 2015, the country imposed a limit of one child on most Chinese families, and skewed gender ratios date back to the early 1980s. China now has 33 million more men than women, many of whom may never find a partner. Among the working-age population, single people and smaller households tend to have more discretionary spending power. 

Travelers are few - but they spend a lot

Only 4 per cent of the Chinese population hold a passport, compared to 35 per cent of Americans - but that 4 per cent spends almost US$200 billion overseas annually, more than any other nation, according to Goldman Sachs. China's urban middle class dominates tourism spending, and Goldman Sachs expects 12 per cent of the population to hold a passport within a decade.

China's middle class loves music

Chinese people spend an average US$86 a year on music-related activities, while US$152 is the US average. Streaming services are used by 66 per cent of Chinese consumers, and 71 per cent of more affluent ones; by comparison, 75 per cent of Americans listen to music online in a typical week, according to Nielsen. Fifty-seven per cent of China's middle class enjoy live music, compared with 51 per cent of the US population overall.

Online shopping is growing fast

Online shopping in China accounts for 16 per cent , or US$672 billion, of all spending - and about half of that takes place on mobile, according to a study by eMarketer, a market research company.

In 2013, China accounted for 35 per cent of the world's total online shopping. By 2018, it is estimated that China's spending will exceed the rest of the world's combined, and will account for one in every five yuan spent in China.  They are spending more and more on health

Between 2004 and 2011, China's personal healthcare spending more than doubled, growing to an annual US$102.25 a person from US$51.05, as consumers became wealthier and government policies raised awareness of health issues.

Sales of vitamins and dietary supplements have boomed in recent years. China's 12th Five-Year Development Plan, announced in 2011, was the first to mention the nutrition and health food industry. Market research company Mintel expects sales of vitamins and dietary supplements to hit US$5.3 billion by 2017 - a 214 per cent jump from a decade earlier.

BLOOMBERG

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom