China’s working population â€” 770.4 million people â€”Â is the largest in the world. But theÂ middle class that dominates its consumer market still only accounts for a tiny fraction of that number: less than 2 percent of workers earn enough to pay income tax, according to Goldman Sachs.
The creation of at least 10 million urban jobs â€” one of the goals announced at theÂ National People’s Congress â€” would affect only a small proportion of the population, but would still mean a considerable boost to the size of the middle class. So while China’s taste for luxury goodsÂ may attract more attention, the country’s appetite for staples says more aboutÂ daily life for most people.
Here is a snapshot of how Chinese consumers are living today.
Beijing recently overtook New York as the ‘Billionaire Capital of the World’Â andÂ country-to-city migration is at its highest levelÂ in recent history.Â ButÂ China’s average annual wage wasÂ 56,360 yuan ($8,655) in 2014, andÂ Goldman Sachs estimates that 387 million rural workersÂ â€” half the working population â€” earn about $2,000Â a year.
The average Chinese consumer spends $7 a day, according to Goldman Sachs. Food and clothing make up nearly half of all personal spending, with 9.2 percent allocated to recreational activities like travel, dining out, sports and video games. Â The average American spends $97 a day, 17.3 percent of itÂ on recreation.
Families are smaller than ever before
There were less than three people in the average Chinese family home in 2014, down from about five in the 1950s.Â Gender imbalance in China is also the worst in the world: about 116 boys are born for every 100 girls, against a global average of 107 boys toÂ 100 girls.
Between 1979 and late 2015, the country imposed a limit of one child on most Chinese families, and skewed gender ratios date back to the early 1980s.Â China now has 33 million more men than women, many of whom may never find a partner.
Travelers are few â€” but theyÂ spend a lot
Only 4 percent of the Chinese population hold a passport, compared to 35 percent of Americans â€”Â but that 4 percent spends almost $200Â billion overseas annually, more than any other nation, according to Goldman Sachs.
China’s urban middle class dominates tourism spending, andÂ Goldman Sachs expects 12 percent of the population to hold a passport within a decade.
China’s middle class loves music
Chinese people spend an average $86 a yearÂ on music-related activities, while $152 is the U.S. average. Streaming services are used by 66 percent of Chinese consumers, and 71 percent of moreÂ affluent ones; by comparison, 75 percent of Americans listen to music online in a typical week, according to Nielsen.
Fifty-seven percent ofÂ China’s middle class enjoy live music, compared withÂ 51 percent ofÂ the U.S. population overall.
Online shopping isÂ growing fast
Online shopping in China accounts for 16 percent, or $672Â billion, of all spending â€” and about half of thatÂ takesÂ place on mobile, according to a study by eMarketer, a market research company.
In 2013, China accounted for 35 percent of the world’s total online shopping. By 2018, it is estimated that China’s spending will exceed the rest of the world’s combined, and will account for one in every five yuan spent in China.Â
They are spending more and more on health
Between 2004 and 2011, China’s personal healthcare spending more than doubled, growing to an annual $102.25Â a person from $51.05, as consumers became wealthier and government policies raised awareness of health issues.
Sales of vitamins and dietary supplements have boomed in recent years. Chinaâ€™s 12th Five-Year Development Plan, announced in 2011, was the first to mention the nutrition and health food industry.
Market research company Mintel expects sales of vitamins and dietary supplements to hit $5.3Â billion by 2017Â â€” a 214 percent jump from a decade earlier.
Originally published in Bloomberg Business March 10, 2016