Talk about some deep pockets! China's consumers are projected to spend more than up to $6.4 trillion a year by 2025, according to a new report.
That's about a 70% increase from the $3.7 trillion that consumers in China spent last year, according to a study by think tank Demand Institute.
Overall, consumption is estimated to grow by an average of 5.2% a year over the next decade, as wages rise and the Chinese become more aspirational in their spending, even as overall economic growth slows.
At that rate, cumulative consumer spending will hit a whopping $56 trillion between now and 2025, keeping China firmly in place as the second-largest consumer market in the world, after the United States.
This is largely in line with what the Chinese government is hoping for the domestic economy. Beijing is engineering a shift away from an export-led economy, toward one driven by higher consumption. It's been an uphill battle as China struggles with a slower growth rate -- the economy is now expanding at the worst pace since the 2009 financial crisis.
But even if overall GDP growth slows by as much as one percent going forward, the report indicates consumption would still grow by 4%. In other words, China appears to largely be on track.
Related: IMF's Lagarde: China's slowdown is 'healthy'
Much of the growth will stay where it has long been -- in China's major cities, such as Beijing, Shanghai and Guangzhou. But other smaller cities are quickly climbing up the ladder, including Fuzhou, Xiamen, Dongguan, Wuhan, Nanjing, Dalian, Qingdao, and many others.
The kind of people who will drive consumption growth are those who can already afford basic necessities and are finding themselves with some spare cash. Many are likely online, where they'll have access to more information and exposure to a variety of ways to spend. They're also more likely to be well-educated and living in urban areas, and when they can afford to, choose better quality goods.
By 2025, consumption is estimated to account for nearly 42% of total GDP, up from the current 37%. That translates to an annual per capita consumption of about $4,400, though that lags far behind that of the current $32,000 annual spending per person in the United States.
That may not seem like much individual purchasing power, because "there remain vast differences in the economic prospects of different Chinese cities," said the report.
