China’s private consumption is likely to reach $12.7tn by 2030, according to a report from Morgan Stanley.
This would make the country a global consumption powerhouse to match the size of the current United States market.
“The purchasing power of Chinese consumers is expected to further grow in the next 10 years as disposable income per capita is projected to double by 2030,” it said.
According to the report, a key shift in China’s consumption structure over the next 10 years means that consumption of services will overtake goods with the share of services in consumption reaching 52 per cent by 2030.
Also, Morgan Stanley stated that the expansion of the country’s consumption market would come along with fundamental changes in the domestic consumption landscape, noting that demographic changes, an important factor impacting consumer behaviour, would also occur in the 10-year span.
It projected that the focus of China’s consumption demand would shift from the current needs of young consumers to household and retirement services as people aged between 35 and 44 years.
Those over 55 years are expected to dominate the country’s purchasing power, according to the bank’s calculations, and continuous government support will contribute to unleashing the country’s consumption potential. It said Chinese policy-makers, on many occasions, underscored enhancing domestic consumption as part of efforts to promote the “dual circulation” development paradigm.
The report also highlighted other factors in promoting the consumption boom in China such as wide adoption of digital technology, which will improve consumption efficiency and Chinese families’ traditional values of providing strong financial support.
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