China’s middle class is booming.
Back in 2000, just four percent of China’s urban population was considered middle class.
By 2022, that figure will be a whopping 76 percent. That’s over 550 million middle-class people in China. That would make China’s middle class alone big enough to be the third-most populous country in the world.
And China’s growing middle class plans on spending more money – a lot more.
Chinese consumption – the amount of stuff that people buy and spend money on – is expected to grow 9 percent a year through 2020, according to the Boston Consulting Group.
Overall, the consumer economy is forecasted to grow by 55 percent, to US$6.5 trillion. That’s an increase of US$2.3 trillion – which is like adding a new consumer market 1.3 times larger than the current consumer markets of Germany or the U.K.
Last year’s Singles’ Day showed how much Chinese consumption is growing. Singles’ Day is a one-day sales event of China’s online sales giant Alibaba. It’s like America’s Black Friday and Cyber Monday rolled into one, only bigger – it’s the largest online shopping event in the world.
In 2016, Alibaba saw US$1 billion in sales in the first five minutes of Singles’ Day. In two hours, Chinese consumers had purchased US$7.2 billion worth of goods. By noon, the total was US$11.9 billion… and the day’s final total was US$17.9 billion – 24 percent higher than the previous year’s total. In fact, it only took 15 hours to eclipse 2015’s total.
This means that Chinese consumers were spending US$741 million per hour – just online at Alibaba. The day’s total is equivalent to the entire economic output of Cambodia in 2015.
What people do when they get money
A recent report gives us some insight into what the Chinese middle class is going to continue buying with all its money. Investors should take note. Each of these areas will offer opportunities in the months and years ahead.
Global management consultants McKinsey & Company surveyed 10,000 people living in 44 cities in China for its 2016 China Consumer Report. The survey found that as incomes grow, people in China are going to be spending more on travel, leisure and looking good.
And the survey says…
Twenty-five percent of those surveyed said they plan on spending more on leisure. This was up from 17 percent three years earlier. Meanwhile, 17 percent said they will increase their health care spending (about the same as before).
The majority also want to “trade up” to premium products from mass appeal products (think Gucci instead of Gap and Porsche instead of Honda) as they make more money. Fifty percent now look for the best and most expensive products when they go shopping. And 59 percent said that if they had more money they would buy more products with famous brand names (up from 41 percent in 2011).
Once-In-A-Generation Bull Market ‘Almost Inevitable’ At This Point…
This is your opportunity to make a fortune from one of the largest explosions of wealth ever…
To understand the best way to play it, we have to go back to 1950s America…
Read the full story here.
China’s tourist boom
23 percent of the middle class also plans on spending more on travel (up from 14 percent). China’s middle class wants to see the world.
In my experience, this is a huge area where new middle-class consumers spend money.
I saw this evolution unfold years ago in Russia when I lived there starting in the mid-1990s. For decades, citizens of the former Soviet Union hadn’t been allowed to travel, except in very special circumstances.
After the end of the Soviet Union in 1991, travel restrictions were eased. But it wasn’t until the economy stabilised years later (and commodity prices rose), and people began to have more money, that international travel took off. Eventually, the then-emerging Russian middle class started to fly to European destinations on holiday, rather than to resorts in Russia and the former Soviet Union. Today, you’ll hear Russian spoken in tourist spots all over the world.
And similarly, if you’ve recently travelled to any popular tourist destinations anywhere in the world, you may have noticed they all have one thing in common: busloads of Chinese tourists.
Seventy million Chinese travelled overseas in 2015 – that’s twice the population of Canada.
Beijing Capital International Airport is now the second-busiest airport in the world (after Atlanta’s Hartsfield Jackson International Airport in the U.S.). China will pass the U.S. to become the world’s largest aviation market by passengers by 2024. Chinese air passenger traffic will double to 927 million passengers a year by 2025 (compared to 904 million in the U.S. by 2025). By 2035, the number will hit 1.3 billion.
In other words, Chinese tourism is soaring.
But it’s just one of the industries profiting.
As China’s middle class grows – along with their disposable incomes – Chinese consumers are buying things at a rate never seen before. Smart investors know that this is the type of trend that can make them life-changing amounts of money if they invest properly.
And we’ve uncovered three companies – in three different industries – that are set to soar thanks to the Chinese middle class. Each of these stocks could double over the next year.
And it couldn’t be simpler to invest in these stocks. They all trade on major exchanges. That means you’ll likely be able to buy them from the brokerage account you already have.
You can learn more about the massive opportunities being created by the Chinese middle class – and these companies – right here. (If you’re a Churchouse Letter subscriber, you should have already seen this report… if not, please visit the subscription portal here to check it out.)
Publisher, Stansberry Churchouse Research