Fascinating piece about how China’s “economic bust” is really an economic transition—a bust in first-tier cities (Beijing, Shanghai, Shenzhen) and a boom in lower tier cities.
Interestingly enough, this is precisely what Beijing has planned all along. By restricting migration, the hukou system was designed to prevent overcrowding in first-tier cities and stop brain drain from lower tier cities. This would avoid a country of a few superstar cities and large, underdeveloped, "flyover" provinces that could be hotbeds for social unrest.
Now, educated professionals living in first tier cities are moving to lower-tier cities, bringing along their talents and energy, and revitalizing the rest of China. What a great development.
Thank you very much for your effort and perspective. It is really helpful (and entertaining) to read your nuanced comments. Particularly as I get bombarded with all these China-doom stories.
Fascinating piece about how China’s “economic bust” is really an economic transition—a bust in first-tier cities (Beijing, Shanghai, Shenzhen) and a boom in lower tier cities.
Interestingly enough, this is precisely what Beijing has planned all along. By restricting migration, the hukou system was designed to prevent overcrowding in first-tier cities and stop brain drain from lower tier cities. This would avoid a country of a few superstar cities and large, underdeveloped, "flyover" provinces that could be hotbeds for social unrest.
Now, educated professionals living in first tier cities are moving to lower-tier cities, bringing along their talents and energy, and revitalizing the rest of China. What a great development.
Great nuance. The McKinsey table in the end was characteristically convoluted yet insightful.
You're definitely onto something.
Been doing more research on this and here's an interesting stat:
下沉市场的社零消费占比近2/3。一般情况下，一、二线城市居民收入高、消费支出也高，往往给人一、二线城市总消费占比也很高的错觉。实际上，以我们对下沉市场和头部市场的划分方式来看，疫情前的2011-2019年，头部消费市场的社零份额略超40%，但经过疫情后，头部市场已经不及40%，社零份额正向着下沉市场倾斜。截至2023年，下沉市场社零份额已经超过60%，这显示头部市场的消费占比并不如大家想象的那样高，而占比更高的下沉消费市场可能更为重要。
https://wallstreetcn.com/articles/3727334
Thank you very much for your effort and perspective. It is really helpful (and entertaining) to read your nuanced comments. Particularly as I get bombarded with all these China-doom stories.
Congrats on #50!
Thanks!