As China makes the transition to a consumer-led economy, it has the potential to generate an incremental $15 trillion in consumer spending over the next decade, according to a report by think tank The Demand Institute.
But this outcome will be possible only if the Chinese government and Chinese businesses adopt the right policies to promote consumption, the report says.
“Given the sheer size of the Chinese economy, a successful transition could also underpin the health of the global economy,” the report states. As consumption spreads from the largest Chinese cities to lower-income regions, companies will have to accelerate the pace at which they tailor their products and services to different income levels, regional tastes and levels of consumer sophistication. Consumer credit services also need to be upgraded.
“Chinese consumers enjoy a relatively limited set of investment and borrowing options that underpin consumer spending in major economic centers,” the report states. “Increased access to such services will encourage and support changes in consumer behavior.”
Global Logistic Properties, a provider of modern logistics facilities, recently established a $7 billion China infrastructure fund to meet the growing demand for modern warehouse facilities, driven by growing domestic consumption, urbanization and a rise in e-commerce.