Largely due to Asia, the world's middle-income population doubled in the past decade, from 399 million to 784 million. Reuters The American consumer has been a central driver of the global economy for decades. Fortunately for the overburdened American consumer, China’s middle class is going to be picking up more of the slack.

China’s middle class is on fire. According to a study by consulting firm McKinsey & Company, 76 percent of China’s urban population will be considered middle class by 2022. That’s defined as urban households that earn US$9,000 – US$34,000 a year. (That might not sound like a lot, but adjusted for prices, it delivers a roughly comparable “middle class” existence to other countries.) In 2000, just 4 percent of the urban population was considered middle class.

China had an urban population of 730 million people in 2015. So even if that figure doesn’t change (and it will only grow), by 2022 over 550 million people in China will be considered middle class. That would make China’s middle class alone big enough to be the third-most populous country in the world.

China’s middle class will be making more money

According to McKinsey, in 2012 54 percent of China’s urban households were considered “mass middle” class, meaning they earned between US$9,000 and US$16,000 per year. But by 2022, thanks to a growing number of higher-paying high-tech and service industry jobs, 54 percent will be classified as “upper middle” class – meaning they earn between US$16,000 and US$34,000 a year.

Meanwhile, Chinese consumption (the amount of stuff people buy) is expected to grow 9 percent a year through 2020, according to the Boston Consulting Group. Overall, the consumer economy is forecasted to grow by 55 percent, to US$6.5 trillion. That’s an increase of US$2.3 trillion – which is like adding a new consumer market 1.3 times larger than the current consumer markets of Germany or the U.K. And that’s assuming that China’s GDP will grow by 5.5 percent a year, which is lower than the projected growth of 6.5 to 7 percent a year.

Chinese households have very little debt

Another factor that’s supporting China’s consumer spending growth is its low level of household debt. China’s household debt-to-GDP ratio of 40 percent is less than half the American household debt-to-GDP ratio, and is much lower than those of other developed countries, as shown below.

This means that Chinese consumers will spend less on servicing their debt – and that they’ll be able to take out more debt. In theory – although there is some cultural bias against excessive debt – this will support further growth in consumption.

A new generation of spenders

In addition to having higher incomes and low debt, the younger Chinese generation is more consumption-oriented than its predecessors. Unlike generations that came of age before the 1980s, people in China have access to the stuff that consumers in the rest of the world do. And the younger generation is also not as frugal as their parents and grandparents. Their consumption spending is growing at a rate of 14 percent a year.

That’s twice as fast as consumption growth for the “last generation,” those aged 35 or older. The young generation is expected to account for 53 percent of total Chinese consumption by 2020, up from its current 45 percent share.

What this means for investors

Chinese consumer companies are one obvious beneficiary of China’s consumer boom. The easiest way to buy this trend is through an ETF that focuses on the Chinese consumer sector.

One example is the iShares CSI A-Shares Consumer Discretionary Index ETF (Hong Kong; code: 3001). It uses derivatives to track the performance of China’s CSI 300 Consumer Discretionary Index. Consumer discretionary companies provide goods and services that are considered non-essential but that people would like to buy if they have the money – which is an increasing focus of China’s middle class.

Another option is the Global X China Consumer ETF (New York Stock Exchange; ticker CHIQ). It tracks the Solactive China Consumer Index, which tracks the share prices of Chinese consumer sector companies.