Thumbing through 330s section [Dewey decimal system] I stumbled upon some interesting reading on consumerism in China. The author went on about the shifting tides of consumerism in China, and the expectations of the global business and political community that the Chinese consumer can step onto the world stage and provide demand for the import of foreign goods and services, enough so as to buoy the global economy.
Because of [and only because of] an ideological aligning with the political mechanism that is the Chinese government, the society is beginning to explore the nuances of mass consumerism.
Meanwhile, on the other end of the proverbial spectrum, the mainstay of the global consumerist economy is going through a once-in-a-generational deleveraging cycle, and the spillover effects are macro due in part to globalization, and in part to the misguided use of the work of Profs. Mundell and Fleming.
An over leveraged consumer in the United States has just seen their home and 401K go through big angulations in value. The burden of the debt generated by a deficit lifestyle became ever-present as unemployment numbers stagnated at record levels. Priorities had to be recalculated, but adjustments were [and still are being] made to ensure the US consumer cleans up a bit for their international financiers, that they can repeat another 20 – 25 year megamacro boom and bust economic cycle driven by a borrow and spend mantra.
Are the Chinese going to keep spending? It seems like the government supports it, and is showing its support by instituting certain social safety nets that cover expenses that people would otherwise have to save for themselves. The next step in the process of the full-fledged Chinese adoption of western style consumerism is a development of brand preferences. American and European firms have built empires from doing just that, and will have a new and modern market to ploy their craft.
Will the impact of such a shift be sudden and resounding? Maybe not, but it just maybe enough of an offset to the loss of the US consumer’s full ability to borrow and spend to keep the global economy on par for a period of mediocre but steady growth for next few years.