If increasing domestic consumption is a key objective for China… there’s much work to be done to make this possible. The problem is not one of consumption; it is one of encouraging consumption domestically. There are several problems with the current retail environment in China: 1) consumer confidence and protection – the trust that products are genuine and safe, 2) price – tariffs/tax and other reasons for price premium on quality products, 3) choices – limited SKUS available. Chinese consumers have repeatedly demonstrated their willingness to spend, from milk powders in Hong Kong, to new iPads in NYC. The question is, how can we remove the barriers for Chinese to spend in their own country.
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There’s a small number of very rich Chinese who buy iPads in New York – most Chinese don’t own any form of computer.
The milk from Hong Kong is because no-one here trusts the quality of milk they buy locally and after the melamine contamination who can blame them?
The reason that Chinese people don’t spend money in the internal economy is because they have to save every penny they have – to pay for their retirement, medical bills etc. with no social security and no guarantees from private business anyone trusts, saving is the key to everything – many Chinese will save 70-80% of their wages for their whole lives.