Rising education, real estate and health care spending weigh heavy on consumer sentiment
Chinese consumer confidence has hit a 10-year high, buoyed by rising disposable income, says McKinsey, although times are expected to toughen
Chinese consumer confidence has hit a 10-year high, buoyed by rising disposable income – but the increasing cost of education, real estate and health care continue to remain a tightening yoke around the necks of many young residents in the country’s larger cities, longer term, according to a new hard-hitting study from global business consultancy McKinsey.
The good news is that 80 per cent of respondents expect their household incomes to increase considerably in the next five years.
The National Bureau of Statistics’ consumer confidence index showed the Chinese consumer confidence index climbed to 115 in August, 2017, exceeding the level it reached in 2007, just before the global financial crisis. The index jumped from a low of 100 in the spring of 2016.
Income growth, however, has in fact slowed in China, from a year-on-year rise of 10.1 per cent in 2012, to 6.3 per cent in 2016.
And Daniel Zipser, a senior partner and head of McKinsey’s consumer and retail practices in China, said despite the confidence that more money will still be coming in, added spending on education, housing and health care expenses still remain hefty financial burdens for Chinese consumers, and that is likely to hit future consumer confidence.
Chinese households now report having carry levels of debt, with the average household forking out half their income on consumer finance and mortgages, to support their lifestyles.
