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Prall: From Mao to now

BY JACOB PRALL | SEPTEMBER 17, 2014 5:00 AM

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There’s been a lot of talk about how we in the United States should fear China and its economic prowess. While its growth is unprecedented, China has to face the problems that come along with capitalism and consumerism.

In fact, the problems caused by consumerism could be incredibly advantageous for the United States. The trade deficit with China could be reversed, and domestic production could surge as more than 1.3 billion people become well-informed, brand-conscious consumers.

In the United States, 80 percent of the GDP is from consumption, while today in China that number is only 50 percent. That being said, China is set to add $1 trillion in consumer spending over the next five years. That trend is only going up.

Why? The Chinese government has made massive pushes to urbanize the nation. Millions of people are leaving rural areas for the affluent eastern cities such as Beijing and Shanghai. More importantly, however, are the central and western cities, where the members of the growing Chinese middle-class make their homes. Massive amounts of yuan are flowing into and out of these new cities, and their transformation from the totalitarian reign of Mao Zedong to now is astonishing, both economically and culturally.

U.S. companies with headquarters in China are finding it harder and harder to stay there, because the shift of consumption is making it harder to pay minuscule wages.

Not only is the physical landscape changing, the people are as well. A recent poll found that 80 percent of the Chinese measure their success in life by what they have.

It is not uncommon for Chinese workers to spend an entire month’s salary on the newest iPhone. These are not blind consumers, either. They are increasingly well-informed, very conscious of class and brand, and have the globe at their fingertips. This has accelerated both consumption and competitive pricing, as American consumerism was born in the ’50s, before the Internet could offer competition on a global scale.

You might think this would be frightening for the Communist Party, but no. It has increased spending on health care and other necessities so people won’t have to spend their paychecks there. They’ve also raised interest rates for savings, which is helping people reach economic goals quicker.

What does this mean for the United States? It means that it’s time to stop fretting over the economical power of China. It has its own problems.

Pollution, primarily from factories whose job it is to fulfill our consumers’ demands, has turned Chinese cities into cancerous regions. Obesity is a quickly growing problem (whether China will be able to use the West as an example to defend against the inevitable problems caused by this is yet to be seen). Finally, the Chinese can’t satisfy their consumers alone; it will be up to the world to satiate the appetites of the Chinese.

The Middle East already sends the majority of its produced goods to China, and as its demands grow, it will lean heavily on India, the United States, and others with the capacity to create complex equipment, and lots of it. So long as the new generation of consumers in China are ambitious and desperately want to display their worldliness through material possessions of the West, the United States has nothing to worry about in the long run with its biggest trade partner. A new era of production and consumption is upon us, and it looks as if we will be on the opposite side of the equation this time around.


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