Consumption Upgrade: Key driver of Chinese economy
Time now for our special series about some of the trending phrases involving China's economy. Today, we take a closer look at what exactly the term 'consumption upgrade' means.
'Consumption upgrade' refers to the evolution of China's consumption mode. It is a reflection of the changing behavior of Chinese consumers and China's broader economic structure.
China has seen three major consumption upgrades. The first occurred during the late 1970s. That was a period when spending on food started to drop in overall household expenditures. At the same time, demand for such goods as bicycles, watches and radios began to rise significantly. The second consumption upgrade happened between the late 1980s and mid 1990s. The change was marked by soaring demand for home appliances, especially washing machines, color TVs and refrigerators. The third upgrade is happening right now. And it's characterized by burgeoning online sales and huge demand for high quality goods and services. Analysts say the trend is the result of rising disposal income and technology innovation. Government data shows that education, health care and tourism are three of the fastest-growing sectors as consumers focus more on customer experience and personalization.
A recent report from consulting firm eMarketer shows that China's retail sales this year are expected to grow 7.5 percent year-on-year to 5.6 trillion dollars. That's thanks to the country's more than 200 million middle-class consumers. The estimate means that China will surpass the US to become the world's top retail market this year.