Unleashing China's Middle Class
“China is ripe for a productivity revolution,” McKinsey states in its recent paper, China's Choice: Capturing the $5 Trillion Productivity Opportunity1. Labor productivity is 15 to 30 percent of the average in the Organization for Economic and Co-operation and Development (OECD) countries. One of the five major opportunities they identify is “unleashing more than $6 trillion in consumption by serving middle-class consumers better.” They conclude that these opportunities can help raise productivity by 1 to 8 percent per year through 2030.
More Chinese consumers would have higher levels of disposable income. Consumption accounts for 69% of U.S. gross domestic product (GDP), 61% for developed markets (DM) and 50% for emerging markets (EM). McKinsey notes that “consumption (in China) has grown rapidly along with GDP, rising by $1.1 trillion from 2010 to 2015. However, its share has remained at around 36 percent of GDP since 2008 (in real terms). We believe that this share can grow to 49 percent by 2030, rising from $4.1 trillion per year to $10.8 trillion. More Chinese consumers would have higher levels of disposable income, and consumer-facing companies would need to address rising demand for higher-quality goods and services. Achieving this growth is an enormous productivity-boosting opportunity.”
1McKinsey Global Institute – “China’s Choice: Capturing the $5 Trillion Productivity Opportunity” – June 2016
Definitions
The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy. OECD countries are democratic countries that support free market economies.
Definitions
The Organization for Economic Cooperation and Development (OECD) is a group of 30 member countries that discuss and develop economic and social policy. OECD countries are democratic countries that support free market economies.
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Emerging market investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, from economic or political instability in other nations or increased volatility and lower trading volume. Please call +1 888 800 4347 or click here access a prospectus online. Investing involves risk, including possible loss of principal.
Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance data may be higher or lower than actual data quoted. For the most current index performance data please call + 1 888 800 4347.
The content of this material is presented for general information purposes only. The statements and opinions expressed are those of the author and are as of the date of this material. All information is historical and not indicative of future results, and subject to change. Readers should not assume that an investment in the securities mentioned above was or would be profitable in the future. This information is not a recommendation to buy or sell. While the information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and it should not be relied on as such or be the basis for an investment decision. This material may include estimates, projections and other "forward-looking statements". Emerging Global Advisors, LLC assumes no duty to update any such statements. Due to numerous factors, actual events may differ substantially from those presented. Past performance does not guarantee future results.
EGA and EGShares Funds are distributed by ALPS Distributors, Inc. Emerging Global Advisors acts as the investment advisor to the EGShares Funds. ALPS and Emerging Global Advisors are unaffiliated entities.
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