CITIC Securities: Looking at China's Consumption Potential from the Perspective of the US and Japan

According to the Zhitong Finance APP, Guotai Junan released a research report stating that China's per capita GDP is currently roughly equivalent to the levels of the United States in the late 1970s and Japan in the early 1980s. Drawing on the development experiences of the US and Japan, when per capita GDP crosses the $10,000 threshold, there is still significant growth potential in the consumer market. The shift from goods consumption to service consumption and cultural consumption will bring numerous investment opportunities. The vast domestic demand market and the trend of consumption upgrading will continue to unleash potential, with lower-tier markets possibly becoming a source of incremental growth.

Guotai Junan's main viewpoints are as follows:

Comparison of the economies and consumer markets of the US, Japan, and China

The total GDP and consumer market size of the United States rank first in the world, with a relatively young population structure, high resident income levels, and consumption tendencies, favoring advanced consumption and credit consumption. Japan is troubled by aging issues, with relatively weak economic growth, and residents' consumption tendencies are becoming more rational, pursuing higher cost-performance ratios. China has a vast domestic demand market with a population of 1.4 billion, and the total retail sales of consumer goods continue to grow. However, the level of per capita disposable income and consumption tendencies are significantly low, indicating substantial room for improvement in the future. The consumer market is expected to unleash greater potential in consumption upgrading and lower-tier markets.

After the 1970s, the United States entered a service consumption-dominated phase

In 1970, personal service consumption expenditures in the United States first exceeded those of goods and continued to widen the gap. The proportion of service consumption expenditures rose from 50.7% in 1970 to 68.5% in 2024. During this period, the share of residents' expenditures on goods such as food, clothing, and automobiles declined, while expenditures on service consumption in health care, financial insurance, cultural entertainment, and other areas expanded significantly. Consumption in movies, music, dining, hotels, and tourism continued to grow. The vigorous development of the service industry created a large number of job opportunities, attracting a significant labor force to shift from agriculture and industry to services, gradually transforming the US economic structure into a "service-dominated" characteristic.

In the early 1980s, Japan's per capita GDP first surpassed $10,000, and the consumer market shifted from goods consumption to high-level service consumption

Economic development and improvements in living standards led to a change in Japanese residents' consumption concepts, shifting from a focus on goods consumption to a greater emphasis on the experiences and satisfaction brought by service consumption. Service consumption in transportation, communication, education, health care, leisure, entertainment, and tourism became new consumption hotspots. The year 1994 was a significant watershed for the Japanese consumer market, as the proportion of service consumption first exceeded that of goods consumption, maintaining a level of nearly 60% thereafter, with the service industry becoming the core engine driving Japan's GDP growth.

Risk Warning: Differences in the situations of the US, Japan, and China; different development paths lead to incomparable consumer markets