Aggressive increases in government spending and investment by state-owned enterprises has cushioned the impact of weak exports. But those gains have not been matched by comparable increases in private consumption. Spending by Chinese households as a percentage of GDP is roughly half the US consumption ratio and remains significantly below private spending levels in Europe and Japan. And despite rising sales of items such as automobiles and household appliances, the ratio of private spending to GDP in China today has actually fallen relative to Chinese spending levels of a decade ago.
Why do Chinese consumers spend so little relative to counterparts in other nations? What can be done to change that? Is boosting private consumption in China’s national interest? How would that contribute to global growth?
In this interview, conducted by McKinsey director Jonathan Woetzel in June 2009 in Shanghai, four distinguished members of the McKinsey China Council of Business Economists explore these questions.
Realistic, knowledgeable discussion on China's economy is in short supply these days. This panel discussion is worth watching. Bottom line: “Expecting Chinese consumers to fill the void of western consumption is not very realistic”:
Source: China's Consumption Challenge
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