The Chinese middle class: a closer look
by Welcome Chinese
China Market Outbound trends
china middle class outbound tourism urbanization
It is often said that outbound tourism is linked to urbanization and the expansion of the middle class in China. A report released by Oxford Economics and InterContinental Hotels Group (IHG) adds some tools to better understand this relationship.
WHO IS MIDDLE CLASS? - Authors identified household income of around $20,000 as the threshold at which Chinese families can afford leisure travel, mostly within national borders. It was determined that households earning $35,000 per year find international travel (out of East Asia) affordable. The number of Chinese households earning more than $35,000 surged to an estimated 27 million in 2013, up from 6 million in 2003. The 21 million new Chinese households now able to afford travel surpass the wealth accumulation by families in other emerging markets. In 2003, there were 11 million households in Brazil, Russia and India with earnings above $35,000. By 2013, this number had grown to 23 million: less households than in China alone.
THE ROLE OF URBANIZATION - Chinese cities keep growing in importance as hubs of economic activity. Urban centers host the vast majority of Chinese middle- to-upper income classes, including households that are most likely to engage in overseas travel. Thus, the rapid expansion of Chinese cities illustrates the substantial economic growth driving Chinese tourism. At present, there are more than 150 Chinese cities with a population of over one million that, given their rapid GDP and income growth over the past decade, can be considered significant source markets for tourism. Shanghai, Beijing and other rising Chinese cities are expected to become the most relevant source markets for international travel, particularly as China’s increasingly urban population begins to choose foreign over domestic destinations.