China’s consumers move into ‘middle lane’ as economy slows
About three-quarters of mainlanders surveyed by Boston Consulting Group say they plan to either maintain or increase spending levels, down slightly from least year
China’s consumer sentiment will weaken slightly this year, but wealthy households and young people will be a strong source of spending, a consulting firm says.
Three-quarters of consumers said they would maintain or increase their spending compared to last year’s levels, down from 81 per cent in 2015, according to Boston Consulting Group in its survey of 3,500 people.
“Even as sentiment moderates a bit, it is important to note that we are looking at a slowdown in consumption growth,” said partner Jeff Walters. “Consumption in 2016 will be tantamount to consumers’ moving from the fast lane to the middle lane on the economic highway. They are not pulling into the breakdown lane.”
More than 40 per cent of urban households have monthly incomes exceeding 8,000 yuan (HK$9,420), which puts them in the mainland’s middle class. Household income growth declined to 8.7 per cent in the first quarter, down from 9.4 per cent a year earlier, amid the slowdown in the industrial sector, which employs the bulk of middle class workers.
The number of families with disposable monthly income of more than 12,000 yuan is expected to double to about 100 million and account for 30 per cent of the urban population by 2020. Their spending is expected to grow 17 per cent this year. Most affluent consumers are employed in the high-end services sector.
People aged 18 to 30, who are expected to make up more than a third of the urban population by 2020, were aggressive with their spending intentions, the firm said. Sixty per cent of respondents in this age range agreed with the statement: “It seems like every year, there are more things I want to buy”. Almost two-thirds agreed that some products “are just too important to me to scrimp on”.
For the emerging middle class, whose spending has been growing at 5 per cent, a quarter intended to spend more this year.