This blog has written that the next wave of growth in the Chinese economy is likely to come from third and fourth tier cities. There were stories about how Alibaba, and their competitor JD.com, where building infrastructure to better service those areas. Combined with tax incentives from the government there is good reason for many young people to stay in smaller cities in the West and North. The jobs may pay less, but the rents and commuting cost are also less. Together smaller cities can make for a slower paced, more tranquil life.
Data in this graph shows that the deficit in income between smaller cities and their bigger brothers is projected to decrease over the next dozen years, which will tend to feed the trend.
“While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier and more eager to spend, and could contribute two-thirds of incremental growth in national private consumption toward 2030,” said Robin Xing, Morgan Stanley’s chief China economist, in a research report. Source: xinhuanet.com