According to a report from Credit Suisse, China's baby boomers will retire in the coming years and spend differently than current retirees.
These baby boomers – defined in the report as those born in the 1960s – are more aware that their health needs are being met, and this will create a "very large shift" in trends in the country, said Will Stephens, Asia Pacific Head of quantitative and systematic strategy at the bank.
According to the report, which surveyed 1,500 middle and older consumers in China, the effects of the aging population will be felt in a variety of industries, from health care to insurance to travel and e-commerce.
Stephens said the group was "the largest cohort in history" – or about 245 million Chinese – highlighting the differences from the current generation of retirees.
"I think the main difference is in the size and size of the current generation of Chinese baby boomers who will be retiring in the next 10 years," he said. "This boomer generation grew up on the cusp of China's turning point in what is essentially the greatest growth trend in history. So they have very different consumption patterns, different interests than what we see among current retirees," he told CNBC on Tuesday .
Citing the survey, Stephens pointed out that 39% of baby boomers expect existing health care social security plans are unlikely to meet their needs.
"There are definitely concerns in this cohort about having this safety net," he said. "There is a lot of interest in insurance products, and at the same time it is likely to act as a catalyst for further reforms of the social security system in China – for example, the increased transfer of state shares, the lifting of capital limits on state pension funds."
The Chinese have become wealthier. According to the report, the gross domestic product per capita has increased from $ 2,100 to $ 10,000 over the past 10 years.
"At $ 10,000, the middle class in China started to take off and they have plenty of reason to balance insurance coverage," analysts said in the report, adding that China has "one of the biggest protection gaps" in Asia. and health insurance.
A man is pushed in a wheelchair along a street in Beijing.
WANG ZHAO | AFP | Getty Images
As a result, they wrote, there is "great potential" for the development of commercial insurance, including pensions.
At the same time, the Covid-19 crisis "could have some kind of silver lining" to speed up health infrastructure spending in China, Stephens told CNBC, adding that it is lower than most developed economies.
High quality medical services in demand
According to survey results, baby boomers are demanding high-quality medical services.
"We believe that integrated high-end private hospitals are likely to benefit from an aging population who is quality conscious," the report said. In fact, the average annual growth rate of private hospitals between 2014 and 2018 reached 23.9%, surpassing the 10.4% of public hospitals.
Therefore, high-quality medical consumables such as implants and coronary stents will also be in demand. Orders for large medical equipment such as ventilators, dialysis machines and MRI machines used in hospitals may also increase, according to the report.
The health food sector will be a "main beneficiary," said Credit Suisse, which forecast annual growth of more than 7% for the next few years.
This sector is said to be valued at 340 billion yuan ($ 49.8 billion), accounting for 20% of global sales – up from 17% in 2017, the bank said.
"Although China's adoption of natural foods is still in its infancy, we believe that in the long term it will follow the trend of developed countries, which is particularly similar to its Asian neighbors such as Japan and Korea," the report said.