China’s economy continues to grow at a rapid rate. No surprise, there. But just how fast is it growing? According to the International Monetary Fund, China is now the world’s top economy.
How Do They Get the Numbers?
To determine the size of China’s economy, the IMF used a methodology that adjusts for purchasing power. As Business Insider explains:
Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have.
Accounting for that adjustment, China has now passed the United States as the single largest economy, and the gulf is expected to grow in the next few years.
The Economic Consequences
China’s growing economy is directly connected to its emphasis on consumers. As Bloomberg Businessweek points out, the recent economic growth coincides directly with less governmental influence on business and the introduction of more capitalistic concepts. For the growth to continue, that trend has to hold up:
There’s no controversy about where China should head: to a more consumption-driven economy in which services play a larger role. Consumption made up 48.5 percent of GDP growth in the first nine months of this year, up from 45.9 percent in 2013. These are “positive and profound changes,” Premier Li Keqiang said in October.
Growth at Lightning Speed
As China continues to shift to a more consumer-centric economy, with purchasing power increasing across the country, the implications for merchants investing in recommerce could be immense. China’s smartphone market is already growing at a rapid rate; with more consumer power, second-hand smartphones will be in high demand as well.
Sure, the newest models will always be the hottest sellers. But in a country with a population of more than 1.3 billion people, the second-hand smartphone market is not to be underestimated. That is especially true considering the high (and globally uniform) cost of the newest devices, which are even less available to consumers in an economy that while growing rapidly, still lags behind the Western world without adjusting for purchasing power. Contact us today to find out how you could take advantage of this important economic development!