BEIJING – Soaring numbers of Chinese tourists packed onto flights out of the country is a sure sign that the members of a fast-growing consumer class of about 130 million are not worried that what will probably be the slowest year of economic growth since 1999 will sap their spending power. Nearly 39 million mainlanders left China on overseas trips in the first half of 2012, about double the number five years ago and evidence that a powerful consumer force - envisaged by the top leadership as the engine of economic expansion in a generation to come - may be bulking up faster than thought. Investors, facing world growth that is slowing to levels economists define as marking a global recession, are anxious for any sign that critical consumer mass may have already arrived in China. Consumer spending in China has enjoyed double-digit growth for a decade, while exports have slowed to become a net drag on the economy in 2011 and in the first half of 2012. Retail sales rose 13.1 percent in July from the same month a year earlier. Adjust for inflation, and it was the second-best month of the year. While well below the 10 percent average of the last 30 years and a level that has previously prompted urgent action to create jobs, 8 percent remains above Beijing's 7.5 percent target. Evidence that consumers are rapidly getting stronger comes from the Geneva-based Digital Luxury Group, which estimates that China's travel market is already worth $232 billion. Its new World Luxury Index China report on hotels says Chinese travelers made 70 million overseas trips in 2011 to be pampered at spa resorts in Bali; to shop in Dubai, Paris and London; and to spend in Singapore and Hong Kong. Tony Tyler, the chief executive of the International Air Travel Association, says airlines will see an extra billion travelers in a decade if average annual incomes in China hit 95,000 renminbi, or $15,000. Part of the proof is in all the building going on. China, the I.A.T.A. says, plans to build 56 new airports nationwide before the end of 2016, with a further 16 relocated and 91 expanded. Chinese carriers made about half of all the $7.9 billion in profits earned by the global airline industry in 2011, according to the association, which expects international traffic growth of 8 percent to 9 percent from China in the five years through 2015. A Beijing-backed World Bank report envisages per capita income rising to $16,000 by 2030 from about $5,000 now, with two-thirds of economic activity forecast to come from domestic consumption. Now that figure is less than 50 percent. A shift to the domestic market, leveraging China's population of 1.3 billion, would cushion the economy from the huge drop-offs in foreign demand that the debt crisis in Europe is causing, barely three years after the trade shock it suffered in the global financial turmoil of 2008-9. An emerging urban middle class has made grocery shopping the engine of domestic retail sales growth, taking in 41 percent of all retail spending in China, which analysts at Citigroup estimate will be up 55 percent over five years to $600 billion in 2012. Annual double-digit wage increases over the last decade - the government has decreed that minimum wages must rise at least 13 percent in the five years through 2015 - have helped China create what the brokerage firm CLSA said is "the world's best consumption story." Average annual wages in the state-owned companies that dominate economic output were 42,452 renminbi in 2011. – Reuters
