Tuesday, December 13, 2016

Economy: The Rise Of The Chinese Consumers

(Drivebycuriosity) -  If we believe the media China is about to crash. But the reality refutes the gloomy predictions. Quite contrary, the recent economic data suggest that the Chinese economy is gaining traction again. Last week I reported about strong import & export numbers (driveby). Last night we we learned that the Chinese retail sales grew 10.8% in November, faster than in October (plus 10.0%  tradingeconomics). This is the strongest retail growth this year.

All categories participated, especially communication equipment (+17.8%), office supplies (+15.4%), home appliances (+14.7%), automobiles (+13.1%), building materials (+11.0%), personal care (+10.7%). Growing retail sales are driving the consumer spending, the engine of the economy. As long as the consumer spending maintains the high growth rate China will avoid any crash.

                                      Secular Catching-up Process

The numbers prove that the huge country is continuing her secular catching-up process, which is fueled by extreme income & wealth differences to the US and other Western nation values. Today China has about $7,920 income per capita, the US number is  $55,840 (worldbank).

China is transforming into a modern service economy, fostered by the technological progress (E-Commerce, Fintech). People are flooding into the big cites. The rapid urbanization creates millions of jobs and is driving income growth for the whole nation. Swift rising incomes are fueling consume and so the economic growth of China.

The swift retail growth also is raising China´ s importance for the global economy, which is increasingly fueled by Chinese imports. Don`t mess with China!

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