Friday, August 14, 2009

China's Underconsumption

Great chart from the Economist showing how little Chinese consumption comprises of the nation's GDP -approximately 35% vs. nearly 70% in the US. In fact, despite signficant growth in the nation's economy over the last decade, consumption as a percent of GDP is actually down from 49% in 1990. With over 1.3 billion people, a robust and growing economy, maturation of the country’s financial system, and the government’s increasing focus on expanding its social safety net for its aging populace (which discourages saving and permits a higher level of consumption during one’s most productive years), the Chinese consumer remains the most compelling investment story of our generation.

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