China’s influence on the global middle class

--FILE--Customers shop for dairy products due to discounts at a supermarket in Nanjing city, east China's Jiangsu province, 16 October 2017.Consumers who are anticipating cheaper prices for products during the upcoming Nov 11 shopping festival may not necessarily find them online, a new study said. According to the 2017 China shopping report jointly released by market consultancies Bain & Co and Kantar Worldpanel, the online prices of many product categories are higher than those offered in physical stores, with the biggest price differences seen for toothbrushes, hair conditioners and kitchen cleansing supplies. Jason Yu, general manager of Kantar Worldpanel for Greater China, said the price differences can be largely attributed to the fact that relatively more high-end products are purchased online. "While Chinese consumers used to shop online for low prices in the past, it has been increasingly noticeable in the recent five years that people prefer products that indicate a better lifestyle or entail more added value," he said. As a result, the sales of imported goods, especially food products and personal care products, have risen significantly, he said. "To cater to this trend, leading e-commerce players such as Alibaba and have upgraded their offerings on their platforms to meet the demand of the rising middle class and younger consumers," he said.No Use China. No Use France.

Executive Summary

Learn more about Global ChinaIn the 1950s, over 90% of the global middle class resided in Europe and North America. Today, over 20% live in China. China is experiencing the fastest expansion of the middle class the world has ever seen, during a period when the global middle class is already expanding at a historically unprecedented rate thanks in part to some of its neighbors like India. By 2027, we estimate that 1.2 billion Chinese will be in the middle class, making up one quarter of the world total.

China already makes up the largest middle-class consumption market segment in the world and is a priority market for major multinational firms. Chinese middle-class consumption initially followed the growth path of the Western middle class, with increasing consumer demand for higher quality products, large investments in home ownership, and vehicle purchases. It is now setting its own middle-class trends. Chinese fintech and e-commerce platforms are changing the way consumers and sellers interact, and they are exporting this knowledge to other developing countries.

In light of this new dynamic, we explore the ways in which the Chinese middle class is likely to impact the global middle class moving forward. First, will the world be able to sustain such a large consumer class within its planetary boundaries?  Second, does China’s middle class pose a competitive threat to other countries, or is it a positive force promoting global growth? Finally, how will a growing Chinese middle class impact global politics, when democracy is no longer the only way to achieve a stable middle-class lifestyle?