Consumer spending will reach $6.4 trillion by 2025
Updated: 2015-11-20 12:26
By Amy He in New York(China Daily USA)
Despite a slowing economy, consumer spending in China will hit $6.4 trillion by 2025, up from $3.7 trillion in 2014, and total consumer spending in the decade between 2015 and 2025 will be $56 trillion, according to a report.
If China's annual GDP slows to 4.5 percent from 2015 to 2020 and to 3.6 percent in the five years after that, consumer spending will still rise 5.2 percent in the next decade, according to the report by the Demand Institute, No More Tiers: Navigating the Future of Consumer Demand Across China's Cities.
The institute is a think tank operated by the Conference Board and Nielsen on consumer trends.
The report's authors said that China therefore "continues to present significant opportunities" for consumer-facing multinational corporations, but cautioned that growth in overall consumption does not necessarily translate to per capita consumption.
Average annual consumption is going to be around 28,000 yuan ($4,400) in China, which is far below the US average of $32,000 a year, said the report, emphasizing "how little hundreds of millions of Chinese actually consume".
Louise Keely, president of the Demand Institute and lead co-author of the report, told China Daily that corporations should not necessarily view that as a bad thing.
"The reason why we point that out is to highlight that China is really a multi-decade opportunity, in that as important a market as it is today -it's the second-largest consumer economy globally - it's eventually going to be the largest. So we advise companies to really take the long view and to understand that going in today and establishing a presence is a multi-decade opportunity," she said.
She said that companies might look at per capita consumption being $4,400 and consider it low, but that the report wanted to emphasize that within that number, "there are still people who are very affluent, that are consuming the way Western consumers do, and that number two, over time, there's going to be more and more of those consumers as China continues to grow and develop."
According to the report, spending growth will be driven by the "connected spender" - people with spare cash to spend and who are connected to the Internet so they have access to more information that influences their spending decisions. A connected spender spends about $4,400 per year, compared to $2,000 spent by those in other households, the report said.
Last year, the authors estimated that there were approximately 368 million people - 27 percent of the total population - in connected-spender households, and they accounted for 44 percent of all spending, approximately $1.6 trillion.
(China Daily USA 11/20/2015 page1)
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