Wealth is shifting to China’s new economy
The government is re-designing China’s economy. It is moving away from manufacturing towards a services-led growth model.
This change means that the new economy sectors like consumer, healthcare, education and IT are likely to grow faster that the rest of China.
China’s services sector still has ample room for growth. Services as a share of GDP (~52%) is still well below developed countries like the US (~87%).
Services sector in China is now a large part of the economy
Contribution to GDP
Look beyond GDP growth in China
Bin explains why it GDP growth does not matter as much as China transitions to a new economy
3 themes in China’s new economy
1. Data is China’s new gold
China is the biggest producer of data globally and churns out about 9 to 10 zettabytes of data1.
However, data in itself is meaningless unless companies can turn it into valuable insights.
China is running ahead when it comes to employing big data technology and artificial intelligence to take advantage of the data available. In the long-run, the ability to analyze massive amount of data will still be important and China will continue to be a first mover in many new technologies.
2. Consumers in China are upgrading
Consumers in China are trading up – accepting higher prices and buying premium, value-added, products across a whole range of categories. This trend, also called premiumisation, is driven by a. income growth, b. urbanisation and c. demographic change.
Chinese consumers prefer premium liquor
Sale of high-end baijiu vs total sales
Baijiu: world's most popular spirit
3. Healthcare and insurance to benefit from China’s aging population
The world’s population is aging and China is the driving force.
The number of those over 65 year-olds in China is expected to grow by almost 6m per year – much higher than any other major countries.
This challenge brings investment opportunities in healthcare and insurance sectors.
Healthcare market will more than triple
Bin Shi talks about insurance sector in China
Be part of China's new economy
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