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These Three Industries Will Explode as the Chinese Middle Class Grows

By Kim Iskyan, publisher, Stansberry Churchouse Research
Wednesday, July 5, 2017

In 1950, the United States started a boom that ultimately produced the largest middle class in history. It also kicked off a surge in the economy that would make the U.S. one of the richest countries ever.
 
China is on the verge of something similar today.
 
In 2000, just 4% of China's urban population was considered middle class. By 2022, that figure will be an incredible 76%. That's more than 550 million middle-class people in China... nearly two times the entire population of the U.S.
 
A growing middle class means Chinese consumer spending will surge, too. And just like the consumers in the U.S. did during its boom, China's middle class is set to spend its money on three specific industries...
 
We expect to see these three things happen with the rise of the Chinese middle class...
 
1.  A massive shift in Chinese health care

Right now, the Chinese government provides some form of health insurance to almost all its 1.4 billion citizens.
 
But public health care is a mess. There are simply too many patients for the poorly paid public doctors to care for. Lines are long, and standards of care are poor for most Chinese citizens.
 
So with more money, the middle class is demanding better health care.
 
Management-consulting firm McKinsey & Company estimates that the middle class will grow private health care spending in China to $1 trillion by 2020, up from a little more than $350 billion in 2011.
 
It's already starting. The Chinese government, keenly aware of the frustrations of its citizens, took the first steps to allowing private ownership of hospitals in 2011. As a result, 2015 marked the first time that private hospitals accounted for more than half of the market.
 
Still, these small, private providers only accounted for 15% of the total services provided to Chinese families that year. So the private health care industry still has plenty of room for growth.
 
2.  Big upside potential from the "Golden Age" of Chinese education

China's growing middle class is also rapidly spending more money on education and tutoring.
 
Parents are worried their children will have to compete even more fiercely for good jobs than older generations. And the Chinese economy is shifting from manufacturing toward services. That means the definition of a high-paying job is rapidly changing.
 
So parents are enrolling their children in the best preschools, middle schools, high schools, and universities they can afford. They're also paying for extra tutoring.
 
According to professional-services firm Deloitte, Chinese education will expand at a 12.7% compound annual growth rate ("CAGR") over the next three years, generating revenue of nearly $440 billion in 2020. In fact, Deloitte calls this the "Golden Age" in Chinese education.
 
3.  Ongoing growth in China's restaurant industry

Fast food is quick and convenient, and it's cheaper than eating at full-scale restaurants. That's why the Chinese middle class – increasingly urbanized and pressed for time – is spending its new money on fast food.
 
According to research firm IBISWorld, the Chinese fast-food industry's revenue grew at an annualized rate of 10% from 2011 through 2016. And that number is expected to grow with the middle class.
 
As a result, many Chinese fast-food restaurants are about to see their profits soar... along with their share prices.
 
To sum up, these three sectors are creating massive opportunities for investors...
 
Remember, the Chinese middle-class boom is similar to the one that started in the U.S. in 1950. Investing during that boom made investors a lot of money.
 
We believe similar gains are possible in each of these sectors in China. So if you're looking to profit from the Chinese consumer boom, start with health care, education, and fast food.
 
Regards,
 
Kim Iskyan




Further Reading:

Regular DailyWealth readers know Steve has been closely following the story in China for years. After his last visit, he came back more bullish than ever. Read up on his trip here: A Scary Truth: China Is Now More Advanced Than the U.S.
 
And catch up on more bullish essays on China's growing economy here...
 

Market Notes


IF STOCKS SOAR, WATCH THIS COMPANY

Today's chart highlights a company that will benefit from Steve's "Melt Up" thesis...
 
Regular readers know Steve believes we're entering the final stages of this historic bull market, where stocks will explode higher. If he's right, it could provide a big boost for trading-exchange stocks like CBOE Holdings (CBOE).
 
CBOE is the owner of the Chicago Board Options Exchange, the Bats Global Markets exchanges, the CBOE Futures Exchange, and other subsidiaries. In other words, if you're trading options in the U.S., there's a good chance you're using CBOE's services. The company collects fees as investors buy and sell. So when trading volume skyrockets, so do shares of CBOE.
 
As the market has marched higher this year, so have CBOE shares. Traders and investors continue to pour into the market, meaning more money in CBOE's pockets. Shares are already up more than 40% over last year... and recently hit a new all-time high. If the Melt Up pushes more investment money into the market, CBOE shares will continue their surge...
 

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