Chinese consumption has become so large that the country is the most important market for luxury and car companies — and is driving sales for global healthcare, entertainment and apparel brands.
For decades the ruling Communist party’s encouragement of saving to fund domestic investment and the accumulation of foreign capital through export surpluses meant even as workers’ incomes rose, they struggled to afford goods that their country exported.
By 2008, household consumption had fallen to 36 per cent of China’s total spending from 47 per cent in 2000. This compared with 70 per cent in the US, while disposable incomes averaged just $2,200 per year. As a result, multinationals drawn to China by the prospect of 1.3bn consumers often retreated disappointed.