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China Consumer Growth

Moving forward, consumption is expected to be the driving force of economic growth in China: McKinsey predicts that consumption will account for 43% of total GDP growth by 2020, compared to 33% in 2010.
China's household income is expected to rise from RMB 24.2 trillion in 2010 to RMB 55.8 trillion in 2015, an increase of over 130% (Credit Suisse, 2011).
By 2020, approximately 850 million people will be living in urban areas compared to 650 million in 2010 – this urbanization is expected to expand the consumer market by making goods more affordable and readily available in China.

China Consumer Growth

Per-capita disposable income of urban consumers is expected to double between 2010 and 2020.
Mainstream consumers (disposable income between $16,000 and $34,000 USD) are expected to account for 51% of the urban population by 2020, significantly increasing the number of people more likely to purchase discretionary items.
China's GDP growth "will raise disposable incomes to an extent never before seen in any other market—pulling tens of millions of households into the middle class and beyond" and allow for significant spending on private consumption (Boston Consulting Group).

China is Focused on the Domestic Consumer

According to China's 12th Five Year Plan (2011-2015), the government is seeking to spur domestic demand - and reduce China's high personal savings rate – by boosting wages, improving the social welfare network, adjusting taxes and promoting urbanization.
China's government is committed to expanding social security, as demonstrated by its recent move to expand pension coverage in urban areas 40% to 350 million people by 2015.
Some additional goals of the 12th Five Year Plan that are expected to positively impact consumption include (1) increasing disposable income of urban residents by 7% per year, (2) creating 45 million new urban jobs, (3) building 36 million new units of low-income housing, and (4) increasing the minimum wage by 13% over the course of the plan.
Source: McKinsey 2012, unless otherwise noted.
 
 
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