Improving migrant workers’ living standards key to boosting Chinese consumption: HSBC
Report says reforms aimed at reducing their high precautionary savings rate could unlock US$95 billion a year in spending
China’s hopes for a consumption boom may depend less on stimulus or wealthy households and more on improving living standards for 131 million migrant workers in its cities – a shift that could unlock spending equivalent to about 0.5 per cent of the country’s gross domestic product, according to HSBC.
In a report released on Thursday, analysts at the bank projected that the world would add about 1.2 billion middle- and high-income consumers by 2050, with Asia accounting for 77 per cent of the increase. India alone was expected to contribute nearly half, while China and other Asian economies would provide much of the remainder.
They said that in mainland China, some of the greatest untapped potential could be found among urban migrant families and new entrants to the workforce, including university graduates, whose high precautionary savings had constrained their spending.
The study said some 130.9 million migrant workers lived in Chinese cities last year, rising to an estimated 170 million when family members were included, and they saved about 54 per cent of their income on average, well above the 36 per cent rate among registered urban residents.