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China to lead global consumption by 2020: survey
By Wang Yanlin |
January 12, 2010, Tuesday
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Online Edition
Online Edition
CHINA may become the world's largest consumer market in 2020 with average income rising and less savings, a Credit Suisse survey said today.
China's household income in the bottom 20 percent has risen by 50 percent since 2004, while income in the top 10 percent surged 255 percent to around 34,000 yuan (US$4,978) per month, Credit Suisse found in its proprietary China Consumer Survey.
The savings rate dropped from 26 percent to 12 percent during the same period. Based on this trend, Credit Suisse expects China's consumer spending will climb and its share of global consumption will increase from 5.2 percent at US$1.72 trillion in 2009 to 23.1 percent at US$15.94 trillion in 2020, overtaking the United States as the world's largest consumer market.
The brokerage firm interviewed 2,700 respondents in eight major cities between October and November last year for the latest survey.
Vincent Chan, head of China equity research at Credit Suisse, said the declining share of household savings, particular from 2008 onwards, could be a natural tendency that comes with higher income.
"At present, the reduced savings are spent mainly on housing, including mortgages and rental payment, which is a reflection of the desire among Chinese households to improve their living conditions and shows the burden of rising property prices," Chan said.
People will spend more on property ownership, and tend to buy big-ticket items such as cars, LCD television sets and personal computers, Chan said.
He also pointed out a major concern over China's long-term consumer market development is that a rise in wages is difficult because of the oversupply of labor.
China's household income in the bottom 20 percent has risen by 50 percent since 2004, while income in the top 10 percent surged 255 percent to around 34,000 yuan (US$4,978) per month, Credit Suisse found in its proprietary China Consumer Survey.
The savings rate dropped from 26 percent to 12 percent during the same period. Based on this trend, Credit Suisse expects China's consumer spending will climb and its share of global consumption will increase from 5.2 percent at US$1.72 trillion in 2009 to 23.1 percent at US$15.94 trillion in 2020, overtaking the United States as the world's largest consumer market.
The brokerage firm interviewed 2,700 respondents in eight major cities between October and November last year for the latest survey.
Vincent Chan, head of China equity research at Credit Suisse, said the declining share of household savings, particular from 2008 onwards, could be a natural tendency that comes with higher income.
"At present, the reduced savings are spent mainly on housing, including mortgages and rental payment, which is a reflection of the desire among Chinese households to improve their living conditions and shows the burden of rising property prices," Chan said.
People will spend more on property ownership, and tend to buy big-ticket items such as cars, LCD television sets and personal computers, Chan said.
He also pointed out a major concern over China's long-term consumer market development is that a rise in wages is difficult because of the oversupply of labor.
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