According to the results of a survey recently released by Guotai Junan Securities, in the post-epidemic era, Chinese residents’ consumption ability is affected by three factors, including impaired income, restricted consumption scenarios, and low consumption desire.

Although Chinese spending is weak, sales of luxury items have surprisingly doubled in the last two years.

According to the “China Luxury Market Report 2021” released by Bain & Company on Jan. 20, China’s personal luxury market was expected to grow by 36% to nearly 74.6 billion in 2021, following a 48% growth in 2020, almost doubling the overall size compared to 2019.

The report predicts that if this growth trend continues, China will become the world’s largest luxury market by 2025, regardless of future outbound travel recovery.

Bruno, a senior global partner at Bain & Company and co-author of the report, said: “From a global perspective, the Chinese market will account for about 21% of the total global luxury consumption in 2021, up from about 20% in the previous year. Moreover, we predict that this growth trend will continue in the future.

No matter how the recovery of outbound travel progresses in the future, the Chinese market is expected to become the largest luxury goods market in the world by 2025.

Meanwhile, China revealed a vast income gap between the rich and the poor.
In May 2020, Premier Li Keqiang told the People’s Daily reporter at a press conference that there are 600 million people whose monthly income is only $158.50 and that it is hard to pay for rent in a mid-sized city on such income.

According to the National Academy of Development and Strategy post, also known as RUC, “hidden income,” mainly distributed between high-income households, widens the gap between the rich and the poor. If it is taken into account, the income gap in China is even greater.

According to Wang Xiaolu’s study, the “hidden income” of the top 10% of urban households in China accounted for 63% of urban residents’ total “hidden income” in 2008. After taking the “hidden income” into account, the actual per capita income of the highest income group of urban households in China in 2008 was 26 times that of the lowest income group, much higher than the nine times given by official data.

The actual per capita income of the highest income group of urban households was 65 times that of the lowest income group of rural households, also much higher than the 23 times given by official data.

The intergenerational gap between the rich and poor in China has become increasingly apparent. On the one hand, the rich children remain rich by inheriting their fathers’ wealth, thus forming the so-called “rich second generation.”

On the other hand, poor people at the bottom of the social ladder are likely to remain poor in the next generation. Peasants and migrant workers are typically at the bottom of the social ladder. Their children are still at the bottom of the social ladder due to unequal opportunities, which is a prominent manifestation of the intergenerational wealth gap in China.

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