Critical Thinking Paper: China's Growing Consumer Spending

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China’s Growing Consumer Spending
In the past three decades, countries all over the world witnessed a radical economic boom in China that propelled it to become the world’s second-largest economy. China was nowhere near where it is today economically in the 60s. However, an aggressive economic approach that focused mainly on growing the local businesses started paying off. As is always the case, some cynics predicted that the growth was bound to end, but until recently, China’s economy has thrived. As the economy was growing, consumer spending was also on an upward trend, and this propelled China even further and helped to silence critics. Currently, there are talks of China’s economy being on a down trend, but according to reports, China closed the last quarter of 2016 on a high which was a positive sign. A look at history shows that China is no stranger to booms and dooms but the message from the government is clear, people should not panic, and there will be no repeat of history.
According to the Economist (2016), China is currently the world’s biggest car market. Initially, the United States held the sole position, but credible sources reveal that China has surpassed it. The above has happened amid reports of China’s economy being on a downward spiral, but as it is becoming the norm, China keeps forging ahead unaware of the negative energy and vibe. The Economic (2016) reported that in March 2016, car sales grew by nearly 10% and this market is projected to keep growing. China was never close to the US on any level economically, but a look into the current trends and one is surprised by the former’s progress. The world was used to having or seeing the US take the lead on many fronts, but currently, new entrants like China, India, and Brazil are shocking the world as they eclipse US’s dominance. As depicted in the chart below, car sales in China will continue to thrive despite numerous reports of a declining China economy.
Apart from car sales, box-office revenues have also experienced staggering surges. Initially, the US always came first, and while it might still be holding the sole position in box-office revenues, its position is indeed at stake. The Economist (2016) reported that China’s box-office revenues increased by nearly 50% in 2015 to $6.8 billion. Currently, Chinese companies are increasingly investing in Western companies and are, therefore, importing newer ideas and injecting them into their local market. Initially, China embraced a policy that discouraged the adoption of western ideas. However, while the policies may not have changed, there is indeed a bit of leniency because people entrepreneurs are borrowing ideas from the west and using them to improve their local reach. Reports from the Economist indicate that the number of theatres or screens has been rising at the rate of 36% every year since 2011. It is indeed encouraging and a warning message to the world because China is not yet satisfied.
Youchi Kuo (2016) reported that “China’s consumer economy is projected to expand by about half, to $6.5 trillion, by 2020 – even if annual GDP growth cools to 5.5%, below the official target.” With such projections, China might eclipse the US as the largest economy in the world. According to Gordon Chang (2017), “consumption’s contribution to GDP growth during the year 2016 was 64.6%.” Even though this figure was 1.8% lower than what was recorded in 2015, it is clear that consumer spending is spearheading China’s push to be the world’s largest economy. With the positive projections stated above, a world with China as the largest economy in the world is becoming clearer. Critics will still have their say but they also cannot deny the projections will propel China to the top or the same level as the US.
It is easy to get lost in all the figures and growth projections provided by the many platforms available. However, it is also essential to look into the factors that will help to propel China to the economic giant we expect it to be. According to Youchi Kuo (2016), China’s economy will be greatly boosted by the rise and growth of the upper and middle class, the increased spending on services as opposed to physical goods, and finally the emergence of a new generation which is closely tied to the growing role that e-commerce is playing in China’s economy. These factors are already propelling the country’s economy and are projected to keep pushing it even further.
* The Rise and Growth of the Upper and Middle Class