Introduction: we often hear investors' questions. China's urbanization has gradually approached the level of developed countries, However, the consumption rate (the ratio of final consumption expenditure to GDP) is far different. Will China's economy be transformed into a consumption driven economy in the future? Is there an inevitable relationship between urbanization rate and consumption rate? In this paper, we try to fully explore by observing the six major developed economies and integrating the differences between domestic and foreign conditions.
Core view:
China's consumption rate will continue to rise slowly, and the growth rate of consumption expenditure can be stabilized at about 6% from the perspective of long-term cycle. When developed countries experience rapid urbanization, Consumption rate (consumption as a proportion of GDP) will generally decline rapidly; when the urbanization rate slows down, the consumption rate will stabilize and climb up. China's consumption rate has bottomed out and started to rise in 2010. Looking ahead, under the background of the rapid improvement of aging, the end of shed reform and the marginal slowdown of urbanization speed, it is expected that China's consumption as a proportion of GDP will continue to increase. From a long-term perspective, although China The potential economic growth rate is declining, but the consumption rate is still improving. It is expected that the growth rate of China's consumer expenditure will stabilize at about 6%.
During the period of rapid urbanization in Japan and South Korea, the consumption rate fell; When the urbanization rate is about 70%, the consumption rate begins to stabilize and climb up. When the urbanization rate increased rapidly, the proportion of consumption in GDP in Japan and South Korea fell. In 1969, Japan's urbanization rate reached 71%, and the consumption rate hit the bottom at 61%. After the urbanization rate of South Korea reached 75% in 1991, the consumption rate also bottomed out at about 61%. After that, the consumption rates of Japan and South Korea increased slowly, rising to 78% and 68% respectively in 2012 and 2002.
In the period of high urbanization, the consumption rate of the United States, Britain and Germany tends to be stable. After the end of World War II, the United States, Britain and Germany have achieved a high urbanization rate, and the consumption rate tends to be stable without further sharp recovery and decline. France experienced a rapid increase in the urbanization rate from 60% to 70%, and the consumption rate also fell slightly.
Although there is still room for urbanization in China, the consumption rate has crossed the low point and it is difficult to fall back again. China's urbanization rate still has 10 percentage points to improve from developed countries. However, with the rapid increase of the aging rate and the end of large-scale shed reform, the urbanization speed is expected to slow down. Referring to the experience of Japan, South Korea and France, after the urbanization rate slowed down, the consumption rate hit the bottom and will not fall again. In 2010, China's consumption rate hit the bottom at 49%, and has started a slow upward trend since then. In the future, China's urbanization rate will continue to increase, but the consumption rate is difficult to fall again.
Under common prosperity, how to balance the improvement of manufacturing investment and consumption rate?
On the one hand, the consumption rate is expected to increase slowly against the background of slowing urbanization. It is expected that the growth rate of consumer expenditure will stabilize at about 6% in the medium and long term. According to the recovery experience of Japan and South Korea after the consumption rate bottomed out, it is expected that by 2030, the consumption rate is expected to increase by 5 percentage points compared with that in 2020, which is basically the same as that from 2010 to 2020. Referring to the medium and long-term potential economic growth estimated by the Academy of Social Sciences, it is expected that the growth rate of consumer expenditure will stabilize at about 6% from the perspective of long cycle.
On the other hand, there is still room for China's manufacturing investment and infrastructure, and the proportion of fixed asset investment in the economy will not decline too quickly. We can see from the experience of virtue development that stable manufacturing investment is an important guarantee for achieving common prosperity. Driven by industrial upgrading and independent and controllable policies, and driven by green investment to achieve the "double carbon" goal, China's manufacturing industry and new infrastructure still have great room for development.
Under the theme of common prosperity, the gap between residents' income and actual consumption level will continue to narrow, and medium - and long-term consumption demand will continue to release. Under the general program of common prosperity, the income of urban and rural residents will continue to increase, the pressure on people's livelihood such as health care, housing and education will decrease, and the residents' consumption will continue to be released. China's per capita GDP has exceeded the US $10000 mark, consumption upgrading has been promoted, residents' consumption concept has also changed from commodity consumption to service consumption, and the demand for services such as medical treatment, catering, medical beauty, housekeeping and tourism has been continuously released.
