Chinanews, Beijing, Jan. 31 – An analytical report made by Guotai Junan Securities Research Institute predicts that Chinese society will soon enter into the third boom of consumption, as the 90 million only children, most born before 1981, have now grown up and become the major consumer group in society. In addition, there are about 300 million children born in China between 1992 and 1998. These children have also grown up and begun to consume. These two generations of children are inclined to spend money than save it, unlike their parents, China Business reported.
In 2006, Chinese people’s personal savings reached 16 trillion yuan and there was a huge surplus in export trade. In 2007, the central government aims to take measures to boost domestic consumption. All these will create favorable conditions for consumption to grow.
However, some scholars warn that the large savings figure does not imply that Chinese people’s income has also increased generally. At present, Chinese people’s per capita income is less than one-fourth of the world’s average. If not taken properly, consumption stimulating measures might make more people suffer from heavy financial burden that results from house purchase, car purchase by bank loans, or credit card overdraft. At present, the number of people suffering from these financial problems has already reached an alarming level in China.
As investment begins to slow down and people’s income increases, it is expected that the proportion of consumption in China’s GDP figure will grow from the present 37% to 41% in 2015, said McKinsey in its recent report.
Yet it seems that most Chinese still prefer to put their money by in banks even if their income increases, since they have to save for their pensions and to pay for the high medical costs and the high educational costs for their children. In most cases, spendings like this make up a large proportion of their income and limit their consumption in other items.
In order to boost consumption, Chinese government might need to provide more public products in the next round of economic development.
