According to recent research by the Economist Intelligence Unit (EIU), China will become a middle class society by 2030.
The EIU report reveals that last year 40% of the Chinese population were in the low-income bracket, which is defined as having personal disposable income below US$2,100 per year.
But this number will drop to just 11% of the population by 2030 as more people move into higher disposable income bands. As China is Australia's largest trading partner, the development of its economy will be a huge benefit to the local economy.
Four companies which I believe will prosper from the growing middle class are as follows:
Bellamy's Australia Ltd (ASX: BAL)
Although there are fears over a slowdown in infant formula sales into China, I feel confident that in the medium-term things will pick up. Especially as China's middle class continues to expand. Bellamy's has created a strong brand image in the market, which I feel puts them in a strong position for growth.
Mantra Group Ltd (ASX: MTR)
As disposable income levels grow, I expect that more of the population will travel overseas. As one of Australia's leading accommodation providers I believe Mantra will see strong demand for the 20,000 rooms it has under management in key tourist hotspots.
Ramsay Health Care Limited (ASX: RHC)
Although at present this private hospital giant doesn't have any operations in China, I feel it is inevitable that at some stage Ramsay will expand into China. The EIU report forecasts for spending on healthcare to be one area in particular that sees a strong uptick.
Treasury Wine Estates Ltd (ASX: TWE)
This wine giant has been experiencing incredible demand from the Asia market, culminating in a 40% jump in volume growth year on year. This ultimately led to the company's Asia segment becoming the second-largest contributor to earnings. I expect China's growing middle class will soon lead to the Asia segment becoming its biggest segment.
