China’s lower-tier cities will fuel a US$9.7 trillion consumption market by 2030, with per capita disposable income for urban households in those cities expected to almost double by that year from current levels, according to Morgan Stanley.
Per capita disposable income for urban households in the lower-tier cities could reach US$8,261 by 2030, from US$4,482 today, Bloomberg News cited the US investment bank as saying in a report.
The per capita disposable income would be 64 percent of big city levels, up from 55 percent last year and compared with 45 percent in 2006.
Better infrastructure and transportation, government-led redistribution of revenue and more affordable housing will also help support spending in the smaller cities.
The lower-tier cities, as Morgan Stanley defines them, make up 59 percent of China’s nominal gross domestic product and 70 percent of total urban population by place of registration.
Businesses making strides in tapping markets in the smaller cities will excel, analysts were quoted as saying in the report.
Government and household consumption drove more than two thirds economic growth in the first quarter, highlighting the shift toward depending on services and away from smokestack sectors.
The expected rise in spending in the smaller cities has implications for various business sectors ranging from food, automobiles, and internet, Bloomberg noted.
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