China’s Middle Class

The McKinsey Quarterly writes:

Housing and health care will be two of the fastest-growing categories. In many emerging economies consumers spend proportionately less on housing as their incomes increase. Since private ownership of China’s housing stock has only recently begun and government subsidies for housing have been reduced, Chinese consumers will have to allocate more of their income to paying for shelter and utilities. These outlays are expected to reach a combined 16.6 percent of household budgets by 2025. In addition, increased home ownership will fuel spending on construction services, building materials, and furnishings. Given the importance of health care to Chinese families, the country’s rapidly aging population, and the challenges facing the public health care system, we project that private health expenditures by urban consumers will grow at a rate of more than 11 percent annually over the next two decades. This increase in spending will create significant opportunities for health care providers, insurance companies, medical-equipment manufacturers, and pharmaceutical companies.

As incomes rise, Chinese consumers will also devote a larger proportion of their household budgets to educational expenses (such as tuition, tutors, and textbooks)more than their counterparts in developed countries. This spending will be driven by the strong link between education and higher salaries, as well as by the growing number of options for both higher and vocational education.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.