![[ GRAPH 1 ] Yearly evolution of household savings in China (Graph: AETOSWire).](https://www.aetoswire.com//blog/pic08690_lw.jpg)
Dubai, United Arab Emirates, -Wednesday 18 December 2019 [ AETOS Wire ]
Due
both to economic slowdown and structural change, Chinese consumers show
signs of changing behavior patterns. According to the Alpho analysis,
it is probable that the number of Chinese tourists abroad will
significantly decline together with the reduction of Chinese savings.
That will cause a cut of capital flow to other countries including South
Asia, Middle East, Europe and the USA.
Based on
International Monetary Fund (IMF) estimates, the Chinese economy is
expected to reach the trade deficit in the next two years. In spite of
the fact that since 2001 China has been proud of its trade surplus, it
started to gradually decline after the financial crisis in 2008.
Currently it’s moving close to zero.
The main
reason regarding this evolution is probably a sharp increase in
international tourism of Chinese residents thanks to the increasing
wealth of the middle class. According to the available sources, the
volume of Chinese people travelling abroad increased from 42 to 162
million between 2008 and 2018, which represents a growth of around 252%.
The consequence of this trend generated the deficit of 250 billion USD
last year. This unfavorable development for the Chinese balance is
signaling there can be a change, one of which consequences is the
above-mentioned decline in outcoming tourism.
Based on data
from OECD, savings of Chinese households increased sharply from 28% in
2000 to 39% in 2010 and still stay relatively high. But Chinese
population is aging and this leads to the trend that people start
spending more than they earn and consequently push the savings levels
downwards. The last figure of savings was 36.1%, in 2016.
]GRAPH 1[
In its report
of global economy outlook, IMF subsequently decreased Chinese economy
growth estimation for 2020 from original 6.6% in previous year to 5.8%.
There is a wind of change in the way Chinese consumers have been
behaving so far.
Milosh Pham
Chief Analyst
Alpho
Alpho is a
registered brand name of Gulf Brokers Ltd, a limited liability company
regulated as a Securities Dealer by the Seychelles Financial Services
Authority (“FSA”) with license number SD013 to carry out certain
categories of financial investment business as permitted under the
Seychelles Securities Act 2007.
Trading is risky and your entire investment may be at risk. TC’s available at https://alpho.com/
Contacts
Ziad El-Maadawi, +201227884844
