Despite the multitude of challenges facing China — including uneven global demand, the prospect of higher US interest rates, and domestic policy pressures — the Chinese consumer story remains well-supported. The middle class is already picking up the growth slack as the economy transitions away from investment-led demand. This rebalancing will persist; since bottoming out at 36 percent in 2010, private consumption now accounts for 41 percent of the economy and is forecast to reach 44 percent by 2025. Consumer demand will continue to expand in the coming years, if it mirrors the trajectory of other regional economies over the past three decades (see “Growth potential for spending”, page 6).

Ongoing services-sector expansion should help to absorb the nearly 7 million new graduates entering the workforce each year, and at higher wages. Together with the nearly 20 million Chinese moving into cities each year — lifting the urbanisation rate from 56 percent in 2015 to abo