“China makes, the world takes.” For decades, that has been the
motto of the Chinese economy, which is built on providing an
endless supply of goods for the rest of the world to buy. But
these days there’s a palpable sense that this needs to change.
Barack Obama, on his recent trip to Asia, called for a
“rebalancing” of the world economy, meaning that China should
save less and spend more, while the Chinese President, Hu
Jintao, stressed his country’s “vigorous” efforts to promote
consumer spending. Everyone wants Chinese consumers to spend
more. So why don’t they? It isn’t that China doesn’t spend at
all: it’s already the world’s biggest car market, and consumer
spending grew eight per cent annually in the past decade. But,
proportionate to its economy, China spends far too little.
Consumption accounts for just thirty-five per cent of G.D.P.,
significantly lower than for most Asian countries and only half
the rate in the United States. Chinese households set aside a
quarter of their disposable income, and, co