After thirty years of economic transformation, China has become one of the largest economies in the world, accounting for an estimated 11 per cent of the world’s economic output (in purchasing power parity terms) and contributing nearly 27 per cent to global growth in 2007 (IMF, 2008). Expanding at an average rate of 9.6 per cent per annum over the past decade, China’s economy was driven by a rapid buildup in physical capital, robust growth in export-oriented industrial production and a steady rise in consumption. In particular, supported by rising income levels, total consumption expenditure in China grew significantly by an average of 7.4 per cent per annum between 1997 and 2007, contributing an average of 4.1 percentage points to annual GDP growth over this period.

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