The drivers of Chinese New Normal Growth
As China’s economic growth slows and the manufacturing and industrial sectors face declines, many companies are trying to determine whether or where they can tap into more growth
The old drivers of the economy, including the middle class and the export sector, are out. What is in for China’s so-called “new normal” is the upper-middle class and the service sector.
Affluent shoppers under the age of 35 and Internet surfers will push China’s consumer market up to USD 6.5 trillion in sales by 2020, an increase of 54 % from 2015, according to consultancy the Boston Consulting Group. Upper-middle class households, defined as those making between USD 24001 and USD 46000 in annual income, will double to 100 million in population by 2020 and account for 30 % of all urban households in the country.
Consumption is not isolated from the slowdown, but China has not stopped shopping, consultancy The Boston Consulting Group said in a recent report. Consumption growth this year is poised to outpace GDP growth, which economists expect to range between 6 % and 6.6 %, BCG said.