China’s household consumption levels will increase by $6trn in the next decade, driven by rising Chinese women’s income and changing female consumption patterns.
“We expect China to contribute about 27% of global consumption growth in the next decade (versus the US at about 19%) and China's consumption to account for roughly 17% of 2030E global consumption expenditure," said Christine Peng, Head of Greater China Consumer Sector, UBS Global Research in a note.
According to UBS research, social changes in China, such as rising numbers of single person households, combined with a female-driven evolution in consumption behaviour will result in higher levels of spending per capita in areas such as luxury goods, pets and healthy food versus traditional consumer sectors.
Asset management and insurance to benefit
The Swiss bank said it also expects an upward trend in female income and a greater allocation of that income to investment products to favour the asset management and insurance sectors.
“Our regression and scenario analysis allows us to model $3.3-$5.3trn of household consumption growth by 2030E from these factors alone. We think markets underestimate the potential implications of the changing consumption drivers in China across sectors and companies,” said UBS.
“We think Chinese women's potentially higher income allocation to investments should favour asset management/insurance; and the growth of single-person households and women's income should lift the per-capita spending budget, implying demand upside in property brokerage, luxury, pet, healthy snacks and beer. In our view, these factors indicate Chinese women are becoming more influential in gender-neutral and even male-driven sectors,” the bank added.