Chinese way of combating consumerism

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Musawer Ahmad Saqif
After enjoying a two-figure growth for three decades in a row, the Chinese economic expansion is finally slowing down. But it still remains the fastest-growing major economy in the world. In the last decade, it surpassed France, United Kingdom, Germany, and, finally, Japan to become the second largest economy in the world. According to Goldman Sachs' analysts the People's Republic of China (PRC) will eventually exceed the US in terms of GDP (nominal) by 2027. However, the Chinese economy, which has been doubling within each decade for the thirty years, will face steep challenges in near future.
As it seems, the Communist Party of China (CPC) is losing its shine, social values are changing and the state-sponsored `market' is now in the limelight following Deng Xiaoping's Theory. Consumerism is the new 'ism' in China. The gap between the rich and the poor has widened gradually. Nevertheless, Deng's theory, which emphasises economic construction and stability, has boosted the average per capita income, and thus managed to thrust the poverty rate down from 85 per cent in 1980 to just over 15 per cent in 2005. This transition which focused on developing a market-based economy is among the most remarkable tales of the 20th century.
China's growth was facilitated by huge investment in infrastructure by the government and also by the expansion of the private sector. As many as 159 large state-owned enterprises assist the private sector with utilities, energy resources and minerals to raise investment.
Ever since the PRC allowed multinational corporations to use their land as an export platform, China has acquired foreign production facilities. Through advanced engineering, they now can manufacture high-end electronic devices, guided missiles, nuclear weapons and satellites. But they account for a small part of production. In most sectors, the condition of work is poor. Technological level and quality standards are as a whole low.
Years of government subsidy and building a proper investment climate have made China the investors' ideal destination. Their trade volume is almost equal to that of European Union, totalling up to USD 3.561 trillion. (Export & Import is estimated at around USD 1.89 trillion and USD 1.66 trillion respectively) However, the days of cheap labour is over. Chinese manufacturers are re-allocating their industries overseas. And as the production cost is rising all over China, it is evident to outside observers such as The New York Times that China is poised to move from export dependence to developing an internal market. The issue at hand now is: Can they achieve a sustainable consumer culture overcoming income inequality and pollution?
It is no wonder China is the world's biggest market of everything. Multinational companies have been targeting China for a quite some time now. The result is straightforward. The PRC as of 2010, has been the second largest consumer of luxury goods in the world next to Japan. If the rise of disposable income of a Chinese household maintains its pace by 2014, they will be the largest consumer of luxury goods in the world. Luxury automobile brands like BMW, Mercedes-Benz, Lexus and Audi have set sales strategies to make China their biggest market, as the western demand declines. Louis Vuitton, Dior, Gucci, Armani and Prada have recorded steady sales growth, despite the massive volume of counterfeit goods in circulation. (Asian Business Council in 2005 alleged that counterfeit products account for 8.0 per cent of PRC's GDP.) Here, one has to mention that an average Chinese consumer is 20 years younger than those in Japan or the USA. Therefore, millions of people are gradually beginning to socialise and express themselves increasingly through more resource-intensive consumer goods.
In the nineties, when one of world's every five cranes was shaping Shanghai to what it is today, the bigger picture was overlooked. The gap between rich and poor widens as development of China is restricted to coastal regions. We cannot paint the entire picture focusing on the affluent community of Shanghai, Beijing or Tianjin. Although by 2025 China will have shifted two-thirds of its population to urban regions, there is much speculation about government strategy to reduce poverty in rural areas. In recent years, the CPC pledged to increase spending in public services to deal with social disparities. New jobs aren't created that much around China anymore, so the government's focus on domestic market and social services: mainly education and healthcare.
We must keep it in mind the term 'consumerism' which is used to describe the effects of the market economy on the individual. It implies the purchase of more goods and services. Although poverty rate in China has decreased by a huge percentage every year, there are more than 150 million people all over China making less than 1.0 dollar every day. The gap between rich and poor is wider than realised and it is putting Beijing under a lot of stress. This issue, if ignored, will be an impediment for China and may result in a social conflict.
Beijing has apparently decided to act on time. Measures have been taken to combat economic inequality through the 12th Five Year Plan (FYP). The Ministry of Human Resources and Social Security has taken steps to resolve the unbalanced economic distribution and announced tax reforms, which would raise the income deduction threshold to reduce the tax burden on the country's low-income population. Many are sceptical and find this far-fetched, while some applaud China's initiatives and remain positive about the outcome of the 12th FYP on the current economic situation. Although this is not radical enough to bring changes, China has pledged to work towards fair wealth distribution and better livelihood for people.
Sustainable growth will call for an extensive shift from external to domestic demand, from investment and export-led growth to growth led by consumption. But how to entertain an increasingly consumerist society with limited resources? This is where environment becomes a part of the equation. China, which now emits the highest amount of greenhouse gases, will be the largest contributor of global pollution by 2050. The average per capita biological footprint, which is still much lower than western nations, is on the rise. More consumption means even more waste and pollution - more oil to make plastic, use of more coal in industries, more teak to make scarce wood materials and more minerals for a computerised life.
The 'Economy vs. Environment' debate is out of date. Now it's costing China 20 per cent of its GDP. China's shift to American-style consumerism needs balance. Environment must be given a significant attention. That's why experts suggest the Chinese version of the 'American Dream' be a green one. A new generation of consumers will have to be considerate about the environment; they have to buy energy-saving products. Constant support from the government for a low-carbon society is essential because the window of opportunity to build a green environment is limited. Water scarcity is also a major concern. Shanghai is sinking. Pressed down by the massive load of its new structures and rapid consumption of water, it is sinking at an alarming rate of one and a half cm per year. This can be presented as the fittest example of over-consumption.
China's own brand of consumerism is not set in stone. It doesn't suggest the rise of another USA. There are a number of ecological and economic factors that have to be considered to get a glimpse of the whole picture. But the idea of ecologically reasonable Chinese consumerism is viable. A receptive population and supportive policy will outline China's economic dynamism in the future. Mass implementation of public policy aimed at shrinking the income disparity as well as stabilising greenhouse gas emission will go a long way in the course of development. It's not at all unrealistic.
The writer studies civil engineering at the Bangladesh University of Engineering and Technology (BUET). masaqif@rocketmail.com