As anyone who reads these pages knows, China’s growth has slowed and its economy is, little by little, rebalancing away from investment and towards consumption. Yet many are also left scratching their heads by news that sales of a wide range of consumer products, from luxury cars to cheap local beer, are so sluggish. If consumption is so strong, why can’t we see it? The answer is simple: people are looking in the wrong places. Both high-end and low-end retail are faring poorly. But look at the middle tier, and the story could scarcely be more different. This is where the consumption boom is unfolding.

Start with the luxury segment. Its best days could well be over. Luxury consumption is slowing, weighed down by a decelerating economy, the ongoing crackdown on corruption and the ‘commodification’ of luxury goods — that is, the idea that Chinese buyers no longer see them as so special or unique. China’s luxury spending contracted for the very first time in 2014. This was just the tipping point. In 2015, Swiss watch exports to Hong Kong, a bellwether of Chinese luxury buying, fell 23 per cent. The sales of Rolls-Royce cars tumbled 54 per cent in China that same year.

And it was not just hard for foreign brands. China is unlikely to be able to produce successful local luxury brands in the foreseeable future. Chinese consumers themselves simply do not associate made-in-China with luxury. This inertia of perception was foretold by the US experience. Despite being the world’s most powerful economy, the US has largely failed to produce top luxury brands such as Hermes or Cartier in Europe. Instead, it is affordable luxury brands such as Coach and Tiffany’s that have gained traction in the US.