From Financial Times:
There has been much talk lately about a consumption boom in China and considerable hype about its rising middle class. Some investment banks have gone so far as to claim that the Chinese consumer will displace the American consumer as the driver of world economic growth as early as 2015.
There is no question that China is becoming wealthier and that consumers in the big cities on the coast are buying an ever wider range of products. But stories of a Chinese consumption boom are largely fantasy, the latest version of the nineteenth century Manchester mill-owner’s dream of every Chinaman adding an inch to his shirt-tail.
The truth is that the retail market in China is only about half as big as commonly reported and that the so-called “Chinese middle class” is smaller, more scattered, and has far lower purchasing power than many hopeful sales managers imagine.[Full Text]