With China being the only major country to grow its GDP in 2020, economists all over the world have been dialling up their forecasts of China’s relative might in the years ahead.
The Chinese economy is now expected to be larger than the US by 2028, presenting enormous opportunities for everything from milk to Maseratis.
Through epidemics and global financial crises, China’s growth story over the past 20 years has been at a speed and scale never seen before, and unlikely to ever be seen again on this planet.
China’s share of the world economy has risen from just 3.6% in 2000 to 17.8% now, and the country will become a “high-income economy” by 2023. In the four decades since opening up, China has lifted 850 million people out of extreme poverty. There are now more billionaires in China than any other country and more Fortune 500 companies.
Yet as enormous as the numbers are, spread across 1.4 billion people the averages aren’t quite so impressive. China’s GDP per capita is less than a sixth of the US. China’s disposable income per capita fares even worse at around one tenth of their American cousins.
Even with the relatively low averages, there are three main reasons why China is by far the largest luxury market in the world, the biggest buyer of cars, and will again be the biggest spenders on international tourism after Covid is brought under control.
For a start, disposable income does not capture most Chinese main source of wealth. The mouthwatering growth of property values – such as the 335% increase in Shenzhen over the past decade – has seen China’s median urban household net worth grow to more than the US. And unlike countries such as the US, where less than two thirds own residential property, 96% of urban Chinese own at least one, seeing most ride the wave.
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