New realities and fresh opportunities HSBC Global Research has done extensive research into the demographic changes taking place across Asia (see Exhibit 3 on page 4). We now narrow the focus to look at what the latest national census data can tell us about China’s sprawling consumer market. Some important trends – China is ageing as population growth slows and the birth rate falls – are well flagged and are broadly interpreted as being negative for the economy. This report drills down further to assess the opportunities that these changes in the structure of China’s population are creating.

Let’s start with the increase in live expectancy due to higher living standards and better health care. This means that the number of elderly people who pack an increasingly “powerful punch” in important parts of the consumer market is on the rise. The result? The growth of the “silver dollar” economy, the first element of our “3S” investment framework.

However, the accumulation of wealth is a process that takes place over time, linking the ageing trend to another powerful demographic force – China’s wealthy “empty nesters” aged between 40 and 64. These are generally dual income households where the expensive burden of childraising either no longer exists or is about to be eased. For both spouses, it is time to spend more on themselves, with the emphasis on the better things in life.

To us, one statistic based on HSBC research stands out – the number of empty nesters in China with an annual household income over USD50,000 nearly doubled in 2015-20. By 2033 this group will likely grow to over 83m, surpassing the number in the US. In our view, few groups of customers anywhere in the world can flex as much “muscle” as China’s empty nesters. And remember, more members of this group move on to join the silver dollar cohort every year.

To the free-spending elderly and middle class we can add two other important demographic forces to the new consumer mix: women and young people. China has one of the highest female labour participation rates in the world (according to the World Bank), allowing more women to become more economically independent. This has significant implications for consumer spending: the “she-economy”, the second part of our framework. At the same time, Generation Z – those born in 1995-2010 – are also starting to make their mark. They tend to be well educated, tech savvy and have a strong desire to differentiate themselves. In many sectors, we see Generation Z as the most important consumer group over the next decade.

So, what are these diverse groups of consumers spending their money on?