Standard of Living

Standard of Living

This paper focuses on the standard of living that is prevalent in China. Standard of living basically refers to the way people are spending their lives in any specific part of the world. The paper will highlight living standard of Chinese people in three parts i.e. current behaviour within broader economic climate, consumer confidence and economic statistics.

Current Behaviour within the Broader Economic Climate

Key factors determining changing consumer behaviour in China over recent years have included the inflationary worries that have plagued many in the population; the increasingly aging population, the result of falling birth rates and longer life expectancies; significant social and economic changes, particularly the growing number of women and younger Chinese entering the workforce; and the social strains within China rooted in increasing income disparity. In the context of the broader global economic climate, it is the lingering effects of the global financial collapse in the key Chinese export markets of Europe and the US that is having the most noticeable impact on Chinese consumers' habits today. This said, the wider economic climate in China has been stable relative to global volatility and China's economic growth continued over 2010 and 2011 at more than respectable rates. This in itself has been widely acknowledged by the general population, and consumer confidence has not suffered any great upheaval over and above the usual central concern amongst Chinese consumers of price inflation (Berlatsky, 2010).

Rising levels of disposable income have spurred the growth of a Chinese middle class. According to a recent analysis by the Carlyle Group, “By some estimates, the country's persistent growth will bring nearly 100 million households into the middle- and affluent classes. This trend highlights strong growth in aggregate consumption, as millions experience rising incomes and consumption shifts from the bare essentials to more discretionary items.” Indeed, annual disposable income continued to rise, with figures showing an increase in annual disposable income from RMB 20 trillion to RMB 22.1 trillion between 2009 and 2010. Per capita disposable income currently sits at RMB 17,250 with 7.8% projected growth between 2010 and 2015, amongst the highest growth rates in the world (Berlatsky, 2010).

In past years, much of this growth has been concentrated amongst the very top earners, and it is this disparity that paints a picture of polarised marketplaces within China's retail sectors. Wealth is concentrated in China's urban centres, particularly in the country's coastal first-tier cities. Recently, there has been growth in pockets in the interior of China as well as in satellite towns and cities on the periphery of the first-tier cities of Shanghai, Beijing and Shenzhen. Current consumption, in turn, has spread wider and further in China in recent years, with many luxury brands seeing growth almost exclusively in these emerging Chinese wealth centres while the mega-regions of China expand on their saturated cores. Luxury brands in fashion and automobiles have been particularly quick to realise their demand potential in the emerging satellite cities and interior provincial capitals of ...