Change of Chinese cities to power spending growth (2)

Increasingly wealthy

The urban population, meanwhile, will become increasingly wealthy. The tighter supply of workers could lead to further wage inflation in coastal cities.

Already, manufacturing-labor costs in the Pearl River Delta rose 11 percent during 2011 and wage rates at factories in Guangzhou and Dongguan have increased 10 percent in the past year.

The upward trajectory in wages is being supported by improving productivity. This has put China in the leading position when it comes to productivity growth compared with other countries - albeit from a low base.

In the future, productivity gains could be captured in the service sector, as well as in China's expanding high-end manufacturing sector. These developments will in turn require initiatives to improve education and training - both hallmarks of a blossoming urban society.

By 2030, consumption growth will be dominated by rapidly growing middle- and higher-income urban population groups. The number of urban households in these categories will rise from 71 percent in 2012 to 87 percent in 2030.

Within those groups, the wealthiest households will grow to account for a proportionately larger share of consumption - accounting for one-quarter of urban households by 2030 but fully half of total urban consumption at that date.

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