Chinese Consumers still Makin’ it Rain

Chinese Consumers still Makin’ it Rain


Prime Minister of China, Wen Jiabao, stated the Beijing stimulus package has allowed Chinese consumers to continue to spend despite the difficult economic conditions. Specifically, tax cuts on new car purchases and lower mortgage rates are helping the two hardest hit industries. With the unemployment rate of China rising and diminishing productivity of economies in other nations; confidence, according to Jiabao, is more important than available funding as it is essential for consumers to continue to spur the economy in a prosperous direction. Confidence is so high right now that ¾ of Chinese people plan to maintain or increase their spending over the next year. Such news is a beautiful sound for automakers as they are depending on the Chinese to help make up for lost sales in most other countries. Lower and lower middle class citizens are taking advantage of government subsidies to purchase cars. Many are purchasing minivans and starting taxi services.

What does this all mean? It is important that one of the world’s largest and economically critical countries’ consumers are continuing to spend money and stimulate their economy after being hit by the declination of the United State’s economy. In today’s world, large companies are global as it is easier to expand operations and communication has improved. The current recession of the United States is clearly showing the interdependency of each economy of the major players, especially those of the G20.

As China has one of the world’s largest populations and market bases for global companies, it is imperative that these consumers are able to make up for the loss in other markets. China is in a stronger position than most that are dependent upon the United States economy as the government has consistently been more conservative in spending and citizens have traditionally saved more of their income than citizens of other countries.