THE Chinese market is attractive to investors seeking long-term returns as the country is poised to become an economy driven by domestic consumption, innovation and an aging population, a private report said.

Food and beverage producers, media and advertising firms will benefit from increased consumer spending in China thanks to a growing middle class, accelerated urbanization, and the government's policy to rebalance the economy from exports towards domestic consumption, according to an annual report by Fidelity Worldwide Investment.

"We see plenty of room for food and beverage companies to grow in China with strong pricing power, comprehensive distribution networks and better product quality management because China's per capita consumption level is quite low compared with levels in developed countries," the report said.

Chinese Internet companies, including online platforms, search engines and social network spaces, will see a surge in demand as the Internet penetration rate in China is expected to rise significantly on improved telecom infrastructure and the spread of smartphones, the report noted.

Life insurance and pharmaceutical products will benefit from a surge in the number of retirees and longer life expectancy.

"We believe Chinese equities are currently trading at historically low valuations and are presenting a good buying opportunity for investors with a long-term view," said Leon Tucker, head of Asia-Pacific equity research at Fidelity Worldwide.