Considering China’s fast-growing economy and immense population, few have failed to notice the lucrative nature of its expanding consumer base. In fact, many countries are currently eyeing this market as key to global economic recovery. In the US, for example, many believe that increased Chinese spending may help restore the $188 billion trade deficit between the two countries, as well as possibly ease tensions over the China’s control over the value of the RMB. For others, the overwhelming potential of the nation’s 1.3 billion consumers, who have to date displayed a solid tendency to save rather than spend, simply presents an unmatched business opportunity.

Despite the relative reticence of the Chinese populace to spend, several important factors suggest that the consumer market will expand widely in the next few years. According to officials, the country’s GDP per capita is expected to rise to US $4,000 in 2010, up from about US $3,000 in 2008 and US $1, 000 in 2003. Recent reports show that urban residents in particular are increasingly willing to invest and spend their money in assets such as property and automobiles. Finally, a growing, younger middle class is on the rise, of between 100 and 200 million people (roughly the size of Japan).

Government policies have and will continue to be influential in the development of the consumer sector. According to President Hu, a large part of China’s economic recovery stemmed from rises in consumer spending targeted by the government’s stimulus package. Especially in the wake of its falling exports, China is looking to shift from an export-driven economy and focus more on domestic demand. To encourage spending, the government has implemented measures such as tax cuts and credit support, increased earnings for middle- and low-income groups, subsidized purchases for rural households, and retail sales promotions such as “old-for new” programs, which have generally been met with success. Retail sales in December 2009 rose 18.5% year on year.

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