A Reuters article here by James Saft dated 30 October 2012 shows that during the first nine months this year, for the very first time, China's consumption at 55% of GDP exceeds the share of investment (50%) and net exports (5.5%).
The article contains various caveats, including the perceived unreliability of China's data and the take of Michael Pettis, a professor at Peking University's Guanghua School of Management, that if the exisitng system is unsustainable, then all bets about the future would be off.
Yet, China is a fast changing economy - let's not forget that it was on the verge of collapse during the nadir of the Mao era. And no less than Premier Wen Jiaboa himself has openly warned many times that the country's economy is "unstable, unbalanced, uncoordinated and unsustainable". The momentum of change towards a slower, more balanced and sustainable model has been well enshrined in the latest Five Year Plan (2011-15). Witness the shopping frenzy in many of China's lower-tier cities and the explosion of green energy initiatives across the land. And under a new leadership, China is poised for further change. Click here
According to a presentation by Homi Kharas of Brookings Institution (June XX, 2011), China's middle class is already the world's second largest (after the US) in absolute numbers (157 million consumers). However, this accounts for only 12% of the population. By 2030, this is expected to grow to over 70 % of the population, consuming $10 trillion in goods and services. By 2030, 100% of the population is expected to achieve average income of $10 a day (2005 PPP$). Click here
The extent and shape of China's rising middle-class consumers are also illustrated by the latest McKinsey and other research reports Click here
The reality is that China is witnessing momentous underlying trends towards consumption as a surging middle-class with greater discretionary income grows rapidly in the largest and faster urbanization drive in human history.
According to McKinsey Quarterly report in August 2012, the world stands at the cusp of a holy grail of rising middle-class consumerism in emerging markets.("Winning the $30 trillion decathlon: Going for gold in emerging markets" Click here The report leaves no doubt that amongst them, China is in the lead, at least for now.
Nothing in the world is certain, except as the saying goes, death and taxes. But supported by powerful trends and sheer existential imperatives, it is at least a little facile to dismiss the epochal move towards middle-class consumerism in a rapidly changing China.
Whether the rising tide of middle-class consumer aspirations across the globe is sustainable for the planet is of course a highly critical issue. Let's hope that in an Age of Scarcity, China, along with India and other large emerging economies, are embracing a Low Carbon future where quality becomes more important than quantity, well-being more important than excess, and less becomes more. Click here
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