A Nation of Spenders

Can the world economy count on China to open up its pockets as Americans are closing theirs?

From The Washington Post:

Image from mamondo.com

BEIJING -- Chen Zizheng wheeled his shopping cart down one of the aisles at the Carrefour store near his house and paused in front of the bottles of Remy Martin, Johnnie Walker and Hennessy, each selling for an amount about equal to the annual salary he earned when he was a young government employee.

But those days were about 30 years ago, around the time Deng Xiaoping launched China on a path of economic reform and opening up. Now China's thriving economy has made it possible for people like Chen, a 67-year-old semi-retired aerospace industry official, to plop down 1,168 yuan, or $170, for a bottle of liquor at a branch of a French "hypermarket" chain.

"It's not that expensive for ordinary Chinese people now," he said, adding that he planned to serve Johnnie Walker Green Label to guests he was expecting to share moon cakes with during last weekend's mid-autumn festival.

"As Chinese society has developed and opened up, people have a better appreciation of imported liquor," said Chen, who used to buy the traditional Chinese stiff drink known as maotai. "When you choose a gift, other people will look at it and if it is brand stuff they will feel respected because you chose it for them."

One year after the global economy went into a tailspin, many economists are wondering whether Chinese consumers, once a thrifty lot, will lead the world out of the recession. Last week, the International Monetary Fund said China would do just that, thanks in part to the government's $600 billion stimulus package and a flood of bank lending. The IMF increased its forecast of Chinese growth to 8.5 percent in 2009 while lowering its forecast for the U.S. economy, which it said would shrink 2.7 percent.

Read On

Chinese people, on the whole, are frugal. But their attitudes are changing. Especially when it comes to people living in cities who are getting rich.

Whether its Buicks or Louis Vuitton or Chivas Regal, Chinese people are quickly developing tastes for material goods. Any idea that China's history with communism took away the passion for these kinds of goods is dead wrong. China is a country full of new rich people. Just like in all countries in the world, people who have money for the first time in their lives like spending it.

I heard a lot of mockery about China's 60th anniversary on media reports this week in America. I suppose the mockery is deserved in a lot of ways. But westerners would be wise to look past this past week's homage to communism because it was just a big show.

China is becoming a blatantly materialist society and is more and more comfortable spending money. It'll take years. But I expect Chinese people to be making up for Americans' (much-needed) belt tightening before too long.