Spurring this expected growth are: greater government emphasis on policies to support the domestic Chinese economy, increases in household income, further growth of urban areas, changes in technology and demographic shifts, the report said. The analysts predict disposable income per capita will likely double from $6,000 a year to $12,000 in 2030 as more people grow older and leave the work force.
Significantly, the Morgan Stanley analysts expect future Chinese spending will go into new categories of growth over the next 10 years as the age groups with the most purchasing power have families or retire. The 35 to 45 age category will likely increase by 25.3 million people, or about the current size of Australia, and those age 55 and above is set to increase by 123.9 million, or about the current population of Japan, the report said. The analysts added the size of other adult age categories will likely decline as a result of China’s years-long ban on having more than one child and an overall drop in birth rates.
Morgan Stanley’s prediction of $7 trillion more in spending over the next several years means Chinese private consumption will likely grow by about 7.9% a year in the next decade, “one of the highest levels in the world,” the report said. While China’s economy overall recovered quickly from the initial shock of the pandemic, personal spending took longer to bounce back. Retail sales contracted by 3.9% last year despite a 2.3% increase in national GDP. On a monthly basis, sales returned to growth in August and grew 4.6% in December from a year ago.