Since the opening market, China’s domestic consumption has risen tremendously. It has now become one of the fastest growth country in the world in terms of the consumption capacity. In 2007, the GDP per capita has achieved USD$2460 per annum, an annual growth of 13.1% for the past 5 years. However, the consumption rate is still low at less than 50%, which is about 28% lower than the global standard, showing the space of growth in China’s domestic consumption.
Because of the rapid growth, the domestic consumption has replaced investment, the first time in 7 years to become the most contributor to China’s GDP among the 3 core contributors of Domestic Consumption, Export & Investment. On the other side, China is now the second biggest exporter in the world and is expected to be the biggest exporter very soon.
By 2009, China will become on of the biggest consumption market in Asia. And by 2014, China is expected to become the biggest luxury market occupying 23% of the world’s luxury product consumption. By 2015, China will be the fourth biggest tourist producer. It is expected to have 100 million tourists travelling overseas every year from China. The local tourists is expected to be 2.8 blillion, which is 100 times of the whole Malaysia population. (source: Sin Chew Jit Poh dated 26/03/2008)
In summary, when China becomes richer, it is not only a better factory, providing neighbours with higher quality goods at low price, but also a better customer, offering neighbours more export incomes. Even Japan, China’s historical adversary, is increasingly dependent on sales to China. Its exports to China rose five times between 1999 and 2003; in the first month of 2007, exports were up 50% over the previous year. In deed, China has already replaced the US as the Japan’s main trading partner . China is also the largest export market for both South Korea and North Korea as well. For the pass 2 years, the export from Japan to Rusia rose 1 fold, export to China rose 45% while the export to US drop year by year. Ultimately, China doesn’t have to be perfectly mistake free in order to produce some of the most profitable companies in the world. Its population doesn’t have to reach American per capita income level to rally commodities and product markets. Even if China’s economy should grow only at 3% to 4% per year. (source: A Bull in China by Jim Roger)
Urbanisation has been growing rapidly in the past 20 years in China. For the next 20 years, it will still be the main contributor to the economy. The China city has contributed 75% of the whole GDP, and believe to hit 95% by 2025. By 2025, China Citizen is expected to increase from 572 million in 2005 to 926 million. There will be 21 cities with more than 10 million population. There are now 35 cities in Europe with such big population. Because of that, China will build 20 thousand to 50 thousand towel, it is 10 times of what New York have. China will also build 5 Billion square meter of road, 170 cities with standard traffic system to accomodate the rapid urbanisation.
From 1984 to 2005, China urbanisation has increased by 1 fold to hit 44% and expected to hit 66% by 2025. With the current urbanisation of less than 50%, GDP per capita of less than USD$3000, the China has now become the world third biggest economy body. It is not difficult to imagine what will happen in the next 20 years, when China with the 1.3Billion population, hitting higher urbanisation with higher GDP per capita.
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