Chinese middle class growth – opportunity or threat?
In recent days some truly amazing data has been published, showing the inexorable rise of the Chinese middle class. According to the study, their upper middle class, the group with greater access to disposable wealth, will make up over 54% of all the urban households in China by 2022 – that’s less than 10 years from now. We are talking households here, so, taking the current average of three persons each, this will mean almost 600 million people. With their consumption forecast to increase by 22%, this is no mean feat.
I can see lots of companies salivating, thinking about opportunities to export and generate business away from the decrepit Western economies to the dynamic Asian ones. Indeed, according to the same study about ⅓ of all high end consumer products currently made in the west (your Louis Vuitton bags and Burberry’s wear, for example) will be gobbled up by the Chinese upper class in ten years or so.
But there is a problem. This astonishing growth has no precedent in history. Our global resources are already stretched. Oil production has reached its peak and is already declining. At the same time CO2 emissions are increasing exponentially and way over predictions. Food production can also barely keep up. Chinese urban areas are not known for being the most sustainable places on the planet and the strain on our depleting resources will therefore be enormous. Conceivably, while the buying power of the Chinese middle classes may increase substantially, other parts of the world, including our mature economies, may suffer.
It would be churlish of people in the west to tell other nations to stop growing. But we should at least be aware that we are still living on a planet made up of finite resources and until such a time that cleaner and cheaper energy sources are discovered we should probably be a little more thoughtful and slightly less bombastic about these issues. Re-thinking growth in general may be an option, as well as continuing to question the sustainability of our life styles. It goes without saying that, once natural resources are depleted and the air around us becomes unbreathable, all of us – whether in the west, or in the east, rich or poor – will be affected in the same way.
- Half a Billion: China’s Middle-Class Consumers (thediplomat.com)
- China’s Rising Middle Class (intothemiddlekingdom.com)
- China’s ‘Second Tier’ Cities: That’s Where the Money Is (business.time.com)