China’s silver foxes
China’s incredible economic transformation is epitomised by the rapid growth in its middle class. By 2030, it is estimated that 58% of Chinese households will be considered “mass affluent” or above. That is, households with a disposable monthly income of 18,000 yuan (A$3709) or more. This growing, cashed-up middle class is also ageing. By 2030 there will be about 250 million people over age 651 in China and they will live longer than their parents. The overall life expectancy in China has steadily increased from 43.5 years in 1950 to 77.5 years in 2020. This demographic transition brings its challenges, but also significant opportunities in sectors such as healthcare and consumer goods.
Investments and resources in healthcare and aged care are essential, particularly since the COVID-19 outbreak. The total healthcare expenditure in China grew at a compound annual growth rate of 15.3% p.a in 2010-2018, exceeding the nominal GDP growth of 13.1% p.a. This growth trajectory is likely to increase as people demand better quality healthcare services, have higher disposable income, and consumption patterns change.
Source: Bloomberg and National Bureau of Statistics.
There is also a boom in segments driven by the older generations, including food and clothing, medicines and supplements. Healthcare and consumer staples are two of the four segments that make up China’s “new economy”. The other two segments are technology and consumer discretionary. Chinese silver foxes generally have a greater tendency to save money. With the improved standards of living, they also have the real spending power. According to data from iMedia Research, the market scale of China's silver economy exceeded 3.7 trillion yuan (about A$760 billion) in 2018 and will reach 5.7 trillion yuan by 20212.
Investors wanting access to China’s booming healthcare sector and its “new economy” can do so via an ETF that tracks the CSI MarketGrader China New Economy Index.