For three decades, since
China began its reform in 1978, its economy amazed the world by growing in
double digits, doubling roughly every seven years. When it first doubled, most
pundits pooh-poohed the growth as coming from a small base. When the economy
doubled again, some say it couldn’t possibly go on. Then it doubled and some
predicted a pending collapse. Despite the dire forecasts, it doubled yet again.
Finally, China’s economy
stopped growing in double digits, but it was not because of any of the reasons
given by the western pundits and economists. The economy slowed to below
10%/year because of the global slowdown triggered by the bubble created by
America’s Wall Street in 2008.
The credit default obligations
and repackaged subprime mortgages brought the American economy to a virtual ruin
while the European and Japanese economies actually contracted. China managed to
grow at “only” around 8% per annum, which means doubling every ten years instead
of seven.
Suddenly, the world’s equity
markets began to take notice of China’s economy, by now the second largest,
second only the U.S. Today when China’s manufacturing indices decline slightly,
all the stock markets take a tumble. Conversely when China’s indices changed
positively, all the world’s equity markets brightened.
Despite the obvious linkage
of China’s economy to the well being of the global economy, there remain
naysayers that maintain their skepticism and believe that so long as China does
not become a democracy, its economy cannot defy gravity indefinitely. It would
be terribly tactless, of course, to point out that so-called democracies were
the first to tumble during the crisis triggered by the collapse of Lehman
Brothers.
Many mainstream economists now
share the widespread belief that not enough of China’s economy is coming from
consumption, that China needs to rebalance economic priorities away from too
much dependence on fixed assets investments such as infrastructure building and
to spend more and save less.
On the other hand, retail
sales in China’s cities have been increasing at a rate nearly double that of GDP.
We see young urban professionals living the life of conspicuous consumption;
travelling overseas and sweeping the luxury goods clean off the shelves of
high-end, name brand shops.
How can we reconcile the
seeming contradiction of China’s need to have more of its GDP coming from
consumption and the obvious over the top consumption behavior of certain
socio-economic groups? One explanation comes from “The Chinese Dream” written by Helen Wang.
This book is an intensive
study of China burgeoning middle class and how it came to be. The bulk of the
book is devoted to personal interviews in China, from migrant workers to
entrepreneurs, from laid off workers to those that got the jump start by taking
over parts of state owned companies in the process of being privatized. By way
of examples, the author illustrated that China’s private sector “is really
neither private nor public” but a peculiar blend of capitalism with Chinese
characteristics.
It’s not possible to explain
the complexity of today’s China in any single book, but by her wide-ranging
interviews and personal stories along with careful research and extensive
footnotes, Ms. Wang has made an important contribution to understanding the
attitudes and mindsets of upward and mobile young Chinese.
By understanding this social
and trend setting group of largely urban professionals, it is possible to
project China’s consumer behavior into the future. Just as China has become an
integral part of the global economy, the Chinese customer will become an
increasingly important buyer for all kinds of goods and services.
Whether you are interested in
understanding today’s China as part of business planning exercise or for
personal enlightenment, this book would be an excellent primer and starting
point.
