BEIJING: Consumer spending in China will increase dramatically in the next five years, with the automotive and luxury sectors set to be among the main beneficiaries of this trend.

Credit Suisse, the financial giant, has estimated that private consumption in the world's most populous nation will leap from $1.72 trillion (€1.26tn; £1.10tn) in 2009 to $15.4tn in 2020.

According to its China Consumer Survey, which was based on interviews with 2,700 respondents, the poorest 20% of households in the country have seen incomes rise by 50% between 2004 and 2009.

The earnings of the average middle class residence also effectively doubled in this period, while the salaries of the top 10% posted an uptick of 255% on this measure, to 34,000 yuan ($4,980) a month.

During the same five-year timeframe, the savings rate has declined from 26% to 12%, a development that "could be due to a natural tendency that comes with higher income," Credit Suisse argued.

By contrast, the car ownership ratio has expanded from 12% in 2004 to 28% in 2009, and could climb to 50% by the middle of this decade.

With regard to brands, domestic firms tend to have the advantage when it comes to telecoms, internet services and travel, with foreign and local operators on a "relatively equal footing" in the FMCG category.

However, multinationals have the edge when it comes to "big ticket items" like technology and luxury goods, with this latter segment, in particular, expected to see a surge of interest going forward.

HSBC has predicted that China could deliver a third of all growth enjoyed by luxury goods manufacturers in 2009, acting as a "pick-me-up" for an industry which has suffered heavily elsewhere during the downturn.

More specifically, the bank suggested that, at present, the fast-growing economy is "a local luxury-goods market that is probably the only male-driven one on the planet."

One reason for this is the importance of the giving and receiving of business gifts among many of the wealthiest members of society.

However, the organisation also stated that "the future is female", as women are now more independent than ever before, and are playing a central role in the workplace.

Other drivers of demand will be younger consumers, who are educated with regard to advertising and branding, and have more disposable income, leading to an increased uptake of "entry-level" products.

Urbanisation is another contributor to this process, and it is estimated that 46 cities in the country will have a population of more than two million by the end of this year, leaving considerable room for expansion.

Data sourced from Credit Suisse/Times Online; additional content by Warc staff