While U.S. “consumer confidence” wallows near all-time lows, with similar readings in many other Western economies, Chinese consumers are nothing less than “bullish”.

An article in “China Confidential” provides a wealth of data on China's primary consumer demographic: middle- and upper-income Chinese households. While this segment of the population only represents about 1/6^th of the Chinese population by number, they account for 36% of all consumption.

More importantly, it is this demographic which accounts for the vast majority of discretionary spending, the “life-blood” of any domestic economy. As China Confidential observes:

"These people are brand-conscious, investment-sensitive, credit-consuming, well-educated, IT-savvy, leisure-seeking and upwardly-mobile. They are also, almost exclusively, the customers of China’s consumer-orientated listed companies."

Nearly half of these people plan to increase their spending this year, with close to ¾ either maintaining or increasing spending. These are numbers which the dying, U.S. economy can only dream about today.

What makes these numbers all the more “bullish” (and startling) is that the robust spending from this segment of the Chinese population comes despite the fact that 60% of these people report reading primarily bad news concerning the overall, global economy.

The one exception to the “bad news” with which these people were bombarded was the positive outlook created by the government's “stimulus” program, which was widely viewed as an extremely positive factor by China's citizens. More and more, the Chinese people are looking at the "global recession" as a problem for other countries - primarily those of the West.

As with most of the consumer data on China's economy, young people, and residents of “second-” and “third-tier” cities are leading the way with both their optimism and their spending.

Perhaps the most-crucial finding in the information-packed article from “China Confidential” was the news that Chinese people are rapidly gravitating toward domestic brands.

This has two important ramifications, one for China, and one for Western economies. First of all, the rapid growth in consumption of the goods of domestic companies means that Chinese consumer-spending will directly translate into manufacturing strength – reinforcing what I have said in previous commentaries: China no longer depends on export markets (most notably the U.S.). (See “Chinese consumers begin to flex economic muscle” and “China to become world's largest auto-market in 2009”)

For Western economies, this means declining benefits for themselves in trying to boost manufacturing sales to the world's most important consumer market. This shift to Chinese “brands” will not mean falling sales for Western companies selling into the Chinese market (thanks to the HUGE, overall increases in domestic consumption).

What it does mean is that China, itself, will derive the majority of the benefits in terms of increased manufacturing. However, for major resource-exporters like Canada the future is much more “rosy” as it doesn't matter whose companies buy-up their raw materials – all that matters is that demand can be expected to skyrocket from current depressed levels.

An important indicator for the future was an additional piece of data from the “China Confidential” research: this all-important, relatively-affluent segment of the Chinese population is expected to increase by close to 50% by 2015, as national incomes in China steadily rise. Thus the gains in Chinese consumer-demand today are not some temporary phenomenon. Instead, these trends can only strengthen in the years ahead, guaranteeing China's dominance as the new, primary consumer market in the world.

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