More than 80% of those defined as “wealthy” (or having an income of at least 150,000 yuan, or $22,341), say they plan to spend at least as much as they did last year, an HSBC survey shows.
The research also found that over 70% of consumers believe their incomes will rise this year, despite uncertainties over the economy and the ongoing trade dispute between their country and the US.
HSBC quizzed 2,000 participants, both men and women, just before Lunar New Year, with more than half of these aged between 18 and 34. Some two-thirds of those questioned had annual incomes of between 150,000 yuan to 240,000 yuan ($35,746), with the rest earning more than 240,000 yuan.
Anyone with an annual income of over 120,000 yuan is considered to be a high earner according to the Chinese National Bureau of Statistics (NBS).
“Domestic consumption has already become a key growth driver in China, contributing five percentage points to the 6.6% gross domestic product growth in 2018,” Julia Wang, HSBC Greater China economist, told the South China Morning Post.
Her assessment is that this will continue in the coming years, thanks to both steady growth in income and a healthy household balance sheet.
“The service sector is still likely to grow more robustly on a trend basis, due to changing consumption patterns of urban middle-class consumers, improving transportation networks, and digitalization,” she added.
Wang rejected concerns over household debt levels, explaining that, so long as services continued to hire, the effect of the US-China trade dispute would be limited.
Since the survey, there have been some grounds for cautious optimism regarding the trade dispute as President Trump tweeted this week that there had been “substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues”.
“I will be delaying the US increase in tariffs now scheduled for March 1,” he added.
And China’s official news agency, Xinhua, reported negotiations were moving towards a “win-win” solution.
Sourced from South China Morning Post; additional content by WARC staff