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While the United States and many European countries are experiencing a shrinking middle class, there is a rising global middle class, especially in Asia.
Asia rising
Earlier this year, professional services firm PricewaterhouseCoopers (PwC) released a study that shows the gap between developed markets and emerging economies is narrowing.
As shown in the graph above, the average gross domestic product (GDP) per capita in developed markets will still be a lot higher than in emerging markets in 2050, but the gap will be a lot closer.
In 2016, the US GDP per capita was around four times the size of China’s and nine times the size of India’s. By 2050, the US GDP is expected to only be around double China’s, and just three times India’s.
By 2030, PwC said Asia as a whole will account for nearly 60 percent of middle-class consumption.
To put that in perspective in 2010, North America and Europe accounted for a little over 60 percent of middle-class consumption.
The chart below shows projected growth of GDP per capita for a range of global economies from 2016 to 2050.
The new middle
In Asian countries, there will be an average annual GDP per capita growth rate of more than 4 percent through 2050.
Meanwhile, developed countries including the US, UK, and Japan will all see a growth of less than 2 percent.
According to Reuters, Brookings Institution scholar Homi Kharas estimates that the European and American middle classes will shrink from 50 percent of the total to just 22 percent. Rapid growth in China, India, Indonesia, Vietnam, Thailand, and Malaysia will cause Asia’s share of the new middle to more than double. By 2030, Asia will host 64 percent of the global middle class and account for over 40 percent of global middle-class consumption.
This growth means millions of people will be joining the middle class over the next 30 year especially in China.
According to Reuters, the percentage of poor people in the world will start to shrink as millions of Chinese and Indian citizens rise out of poverty. The biggest surge will be in new members of the middle class over the next 20 years in China and India. The percentage of people below the middle will drop by 70 percent by 2030.
China is seeing a massive middle-class boom. By 2022, there are expected to be 550 million middle-class people in China. That would make China’s middle class alone big enough to be the third-most populous country in the world.
China's spending habits
China’s middle-class boom is already starting to show in spending habits. China is set to pass the US to become the world’s largest aviation market by passengers by 2024. And Chinese air passenger traffic will double to 927 million passengers a year by 2025 (compared to the US’s 904 million by 2025). By 2035, the number will hit 1.3 billion.
People shopping in the financial district of Shanghai.
Meanwhile, India is predicted to become the world’s third-largest aviation market by 2032. Indian air passenger traffic is expected to increase to 500 million passengers a year over the next 10 to 15 years. In other words, tourism in China and India is booming. But it’s just one of the industries set to profit from a rising global middle class.
Another area of growth that has China’s middle class moving to the fast lane is running, a sport that study after study has always equated with middle and upper-class lifestyles. According to the Chinese Athletic Association (CAA), the number of runners in China almost doubled last year, with the number of races increasing by more than 10 times in the past five years.
According to the CAA, China hosted 22 road running races nationwide in 2011, but that number skyrocketed to 328 in 2016. Of the 328 events last year, 125 were marathons, 128 half-marathons, and 75 other road races that took place in 133 cities in China. CAA statistics also show that a total of 2.8 million runners took part in these races last year, 1.3 million more than in 2015. The CAA said the total number of runners in China can reach over 10 million by 2020.
China’s fast-increasing disposable income is also responsible for the shrinking appetite for instant noodles.
The growing middle class craves a healthier diet. The rise of food delivery smartphone apps gives people access to quick, easy inexpensive higher quality meals.
According to the World Instant Noodles Association, China’s demand for instant noodles, or “convenient noodles” in Chinese, plunged 17 percent in 2016 to 38.5 billion servings. But China’s food delivery industry reached a market size of 152.4 billion yuan (22.8 billion US dollars) last year, a 232 percent increase from 2015, according to China e-Commerce Research Center.
(CGTN)
