Rosy New Year wish of con­sumers

China Daily (Canada) - - LIFE -

Some me­dia out­lets deem China’s eco­nomic slow­down to be the top fi­nan­cial and eco­nomic news of 2015, as it hurt consumption world­wide. But Chi­nese con­sumers seem to dif­fer. Two fig­ures may ex­plain why. One is that China’s on­line re­tail sales are ex­pected to out­per­form the rest of the world by reach­ing 4 tril­lion yuan ($618 bil­lion) this year. The other is that about 120 mil­lion Chi­nese trav­eled over­seas in 2015, making China the largest source of over­seas tourists in the world.

For most of the past three decades, China was known for its trade­mark ro­bust growth and the un­be­liev­able dili­gence of its work­ers. Rapid eco­nomic de­vel­op­ment not only brought pros­per­ity to China but also fu­eled con­tin­u­ous growth around the world. And Chi­nese work­ers shone promi­nently across the world, prompt­ing even the Time mag­a­zine to name them the Per­son of the Year in 2009 when the world econ­omy was still strug­gling with the worst global fi­nan­cial cri­sis in about seven decades.

How­ever, as the Chi­nese econ­omy braces for the slow­est growth in a quar­ter cen­tury, a sense of dis­ap­point­ment has arisen among those who have long counted on China as a key driver of global growth.

Con­cerns over the health of the world’s sec­ond-largest econ­omy are jus­ti­fied. Af­ter the coun­try’s growth slowed to be­low 7 per­cent in the third quar­ter of 2015, the Chi­nese au­thor­i­ties sounded the alarm against the ris­ing stock of un­sold homes, the lin­ger­ing over­ca­pac­ity of many in­dus­trial sec­tors and the rapid pileup of com­pa­nies’ and lo­cal gov­ern­ments’ debts.

Do­mes­ti­cally, peo­ple are anx­ious to know whether mea­sures to elim­i­nate over­ca­pac­ity and ex­ces­sive debt will cost too many jobs and spook the fi­nan­cial mar­ket. In­ter­na­tion­ally, in­vestors are wor­ried about the down­ward pres­sure China’s eco­nomic slow­down will cre­ate on com­mod­ity prices that have al­ready plunged, caus­ing fi­nan­cial dif­fi­cul­ties for ex­port­ing coun­tries.

But that China’s re­struc­tur­ing has caused its tra­di­tional growth en­gines of in­vest­ment and ex­ports to sput­ter alone should not gen­er­ate too much pes­simism. In fact, as China’s per capita GDP reached $7,500 in 2014, Chi­nese con­sumers’ ea­ger­ness to spend their hard-earned money for a bet­ter life has be­come in­creas­ingly ev­i­dent de­spite in­come dis­par­ity re­main­ing a ma­jor con­straint.

If Chi­nese e-commerce gi­ant Alibaba can per­suade con­sumers to spend more than 90 bil­lion yuan on the world’s big­gest on­line shop­ping day onNov 11, China has the po­ten­tial to be­come the world’s largest on­line re­tail mar­ket, al­though its over­all share of consumption in the econ­omy re­mains con­sid­er­ably low com­pared with de­vel­oped economies hav­ing sim­i­lar in­come lev­els.

A 20 per­cent in­crease in the num­ber of out­bound tourists in 2015 also points to a ris­ing trend, which started in 1998 and has in­creased by nearly 13 times since. The im­pact of the ris­ing num­ber of tourists was ev­i­dent at home, too, which saw­more than 4 bil­lion jour­neys in 2015 that gen­er­ated tourism rev­enue of over 4 tril­lion yuan.

Com­pared with the $10-tril­lion Chi­nese econ­omy, th­ese bright spots of growth may not be big enough. Yet the very po­ten­tial of th­ese mar­kets and the con­sumer en­thu­si­asm should war­rant more con­fi­dence in China’s on­go­ing eco­nomic trans­for­ma­tion to consumption-led growth.

Th­ese mar­kets are far from per­fect. The sales of poor qual­ity or fake goods re­main the Achilles’ heel of China’s on­line re­tail sec­tor, pre­vent­ing its sound de­vel­op­ment. Dis­sat­is­fac­tory ser­vices at tourist spots also are cause for con­cern.

But if Chi­nese peo­ple travel and shop more in the new year, there is no rea­son why pol­i­cy­mak­ers should not do their best to im­prove reg­u­la­tion and ser­vices for con­sumers’ greater sat­is­fac­tion.

And if Chi­nese con­sumers are happy to loosen their purse strings, should not those who fear the Chi­nese econ­omy might suf­fer a “hard land­ing” take a sec­ond look at the model they used to gauge its evolv­ing econ­omy?

The au­thor is a se­nior writer with China Daily. zhuqi­wen@chi­nadaily.com.cn

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