The Effects of Chinese Consumers on China's Economy essay

Abstract

The Chinese market is proactively growing, and Chinese companies are entering international markets, so that a strong economic revival in China can be observed. It is becoming increasingly difficult to ignore the fact that such intensive growth will have certain implications. One of the most threatening implications is the evidence of proactive trend on consumerism, since a purchasing capacity of local populations has become sufficient within recent years. Therefore, consumerism poses numerous threats to Chinese economic excellence. These threats are justified with social, political, environmental, and demographic foundations. The following paper provides an account on these implications and comments on the most essential aspects of Chinese trend on consumerism in that regard. 

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It is becoming increasingly difficult to ignore the fact that Chinese economics is aggressively developing nowadays, and this country will be able to compete on the macroeconomic level with already developed countries. Chinese economic excellence is a result of multiple factors, which not only boosted a cost-effective production and distribution, but also launched a trend on a so-called consumerism of Chinese citizens. Consumerism is defined as a tendency of increased purchasing potential aimed at obtaining basic as well as specific items of production. Generally speaking, Chinese purchasing capacity has increased within a couple of years, so that Chinese populations feel much more confidence in obtaining new product lines of mass consumption. This wave of consumerism produces not only positive effects on Chinese economy, though. A wide range of factors that can adversely affect Chinese economic excellence are present, but implied to a different extent. The government is expected to take the main responsibility for addressing these issues, which is why certain steps towards relevant policy-making are required. In such a way, China is facing numerous implied threats to its economic success, which is why these implications are worth analysis. The following study provides an account of negative factors of Chinese consumerism, which adversely affect the national economy.

General Background

Consumer aggressiveness in China has obtained a form, which caused a proactive development of advertisement within all media dimensions. In fact, China was also known for its strong political slogans, which seem to transform into advertisements. It is becoming increasingly apparent that every single company is striving to gain more shares within the local market in order to leverage sufficient sales without spending much of the cost on the shipping their products abroad. One may argue that advertisements as a sign of reviving consumerism cannot be present in China owing to the fact that many citizens do not have a direct access to television. It is certainly not true, as long as each family has at least one TV-set, so that the entire nation has access to television and has advertisements and commercials. As Chinese Department of Communications notes, even the poorest families have TV-sets and regular access to television. Hence, such media coverage renders a consumer awareness about all products and services available locally as well as internationally, so that Chinese citizens have an opportunity choose goods within the expanded market. Besides that, local brands arise much faster than companies that develop them. It is hard to believe that less than a couple of decades ago, the most popular international brands such as Coca-Cola faced considerable hardships with entering the Chinese market, and China launches multiple original brands of its own now. International organizations are reported to launch a program that will facilitate market expansion throughout brand development and appropriate communication with target audiences, especially with youth of big cities. In consequence, consumer culture occurs to shape the Chinese market in terms of media strategies and product branding.

Beyond a doubt, such changes are caused with increased consumerism in Chinese society.  The nature of Chinese consumerism can be also explained with the fact that Chinese economy is gradually changing towards market layout. Thus, local populations receive a recent opportunity to spend their money on any product they prefer, as long as more and more purchasing opportunities accordingly emerge. Planned economy did not presuppose a possibility of making redundant purchases. For now, Chinese citizens are empowered to obtain an obvious benefit from a spreading availability, so that a wave of consumerism is a natural reaction on such drastic changes. Taking this point into account, the government should be ready not only to leverage the situation but also create a back-up strategy in case wave of consumerism becomes uncontrolled. Chinese consumerism is a temporal phenomenon, and the economy may need just to readjust its layout for this period, as this social process in unavoidable. The other countries, however, may use this situation in their favor, once Chinese citizens are able to purchase imported products. The local government has to preserve a leak of cash and thus market shares from national markets but limit negative impacts of consumerism, especially under circumstances of numerous implications. 

Economic and Political Implications

Provided that the Chinese economy was previously defined by two social classes, it is informative to note that 10% of the upper class controls 90% of the economy meanwhile 90% of lower class account for a meager 10% of the economy, which is why new wave of consumerism has caused a significant expansion of the middle class in China. Thus, the reports about annual spending of the average Chinese citizen has informed about increases by more than 10% per year, which means that an average income of Chinese residents accordingly increased. This evidence caused a sudden response of governmental shifts in policies, which resulted in more active cash flows, especially in regards to workforce benefit. For example, construction road projects have obtained a strong popularity, so that many workers were hired and received a sufficiently paid salary. In such a way, even the poorest families obtained an opportunity to improve their financial well-being.  Also, the government has launched a proactive program of establishment of institutionalized social servicing such as health insurance coverage and support of currently unemployed citizens. This initiative was aimed to promote a view that people can benefit from saving their money. Hence, the average Chinese citizens managed to enhance their financial welfare, so that they become able to afford all basic needs a priori. As the Chinese Vice President admitted, the government has dramatically contributed into the expanded income of the middle class throughout establishment of new schools and provision of pilot jobs for retired citizens in order to reduce expenditures of families, which include retired and young members. Hence, these initiatives lead to obviously expanded local market and reallocated a position of Chinese goods as the target of local consumers. Therefore, this evidence suggests that Chinese economy will proceed on exposure of a strong threat to the U.S. market, once its aggressive consumer behaviors are based on profound foundations, which are expected to produce their effects on a long run.

Such active development of economy and a wave of aggressive consumerism may result in particular implications in political sense. First of all, Chinese economic excellence enables the country to be involved in key geopolitical processes, and consumerism may respectively become a vulnerable target. As it has been already mentioned, China will have to compete hard for its local customers, since the key competitors will be willing to obtain a target audience with a high purchasing potential. Hence, a certain political discourse can be deployed to this competition. Second, consumerism may result in strong political changes within China, as long as overproduction may lead internal competition to an extent of influencing governmental policy-making. The companies may demand more favorable conditions for addressing local trends on products and services. The government risks to be placed in a hard and dubious situation, since regulation of production and consumerism is still a requirement meanwhile a macroeconomic purpose presupposes a fast generation of profits at least on a local level. In the event of an excessive pressure on local manufacturers, a wave of protests can potentially emerge because Chinese companies will not simply leave a considerable segment of its target audiences unsatisfied in terms of their demands. The government needs to feel the upper and lower margin of break-even points, which designate borders of excessive and insufficient governmental regulation of overproduction and factor of consumerism.   

Evidence Within The Industry

Arising trend on consumerism in China has significantly boosted the automotive manufacture industry in China and within the entire world.  Two decades ago, a rare Chinese family had a car. As a matter of fact, it was hard to predict that Chinese automotive market could be compared with the market of the United States. Nonetheless, the recent developments changed the situation, so that the United States can lose the competition. In 2010, Chinese automotive industry appeared to become a strong threat to the U.S., once Chinese market managed to overtake more than 40% within a single year. This evidence can be justified with a large flow of consumers as well as a common tendency among Chinese companies to provide local consumers with products and services adequately measured by balance between quality and price. The vehicles manufactured at local plants started achieving the quality equal to vehicles produced for the export. Nowadays, such international enterprises as General Motors are attempting to enter Chinese market in order to obtain a larger market share. Besides an evident adverse impact placed on local organization, the entry of such large enterprises will additionally widen the market thereby providing more regular job offers to Chinese citizens.  On a separate note, a wave of Chinese consumerism will lead to a proactive boost of Chinese economy to the level of macroeconomics. By the same token, industry of electronic goods and related services is one more dimension of drastic changes in Chinese economy, as this industry is also expected to address macroeconomic purposes of the country.

Actually, Chinese high technologies as well as automotive industry are mutually related, as Chinese market stared presenting smart vehicles based on sun batteries and autopilot driving. These products are only entering the local market, but they distinctly witness about intensification of consumerism. Local populations are not satisfied with average products and services any longer, so that launching of cutting-edge product lines is a reasonable response of local manufacturers. This evidence implies the fact that consumerism may become a regular phenomenon of Chinese economy. Furthermore, Chinese companies are planning to trade these products at low prices worldwide. That means a widespread availability of up-to-date technologies, and local consumers may need more. An ability to meet subsequent demands of local populations is not distinct yet, which is why consumerism may suppress Chinese economic excellence, as local populations will be dissatisfied at one moment. Such implications are present not only within automotive industry, but also in industry of computer and device technologies. Chinese companies actively develop cost-effective equivalents of Western smartphones and other devices. The segment was appropriately chosen because smartphones, tablets, etc. are a sort of symbol of mass culture nowadays. This factor facilitates consumerism in China even though an evident competitive advantage of worldwide trading is apparent. 

Effects of Inflation

The Chinese government was expected to strive for control over inflation within the country. That can be explained with the fact that a better income of Chinese citizens means a respective purchasing capacity. The related literature suggests that this evidence makes a significant impact on the market prices, especially in such countries as China. For instance, a purchase made by five people makes this item obviously popular but less valuable, as long as its production usually grows in order to meet the demand. That is why an increased demand for the goods and services in Chinese market is quite apparent. In the event traders and distributers recognize a significance of their commodities, they will certainly increase prices in order to get pre-market profit. In order to avoid such situation, the Chinese government launches a program that leverages raise of prices by manufacturers and other members of Chinese supply chains. Actually, financial reports about the inflation considerably reduced within last few months owing to measures that evidently witness about a reasonable governmental intervention. Therefore, the government has enough knowledge and confidence to leverage and stimulate business in accordance with aligned national interests and macroeconomic objectives. According to Chinese National Bureau of Statics, implementation of these policies managed to suppress adverse effects of inflation and preserve Chinese economics from profound disasters.

The problem, however, will not disappear. The government managed to eliminate effects meanwhile causes of the problem should be found in the trend on consumerism. Overproduction will be a constant threat to a new wave of inflation in case the government does not invent a strategy for a natural limitation of Chinese consumerism. It is a hard task under circumstances of globalization and promotion of mass culture worldwide. That is why the government should develop a plan for local companies for achievement of commonly recognized macroeconomic objectives. Surprisingly, China does not have to become a creator of further market trends, as it is harmful to its economy. Provided that China is producing recent top-technologies and dictates the trend to global markets, consumerism will respectively intensify. The government may make a mistake at any moment well as a possibility of natural loss of control over consumerism is also present.

Dependency on Energy and Environmental Impacts

Chinese consumerism also makes a negative impact on energy dependency of China and devastation of the environment. Once more and more citizens have privately owned cars, a demand for petrol has accordingly grown. Economic reports witness about the country’s a major need for export of crude oil and other resources required for production of gas for vehicles. Unfortunately, China is placed in inconvenient political position, which requires the country to lead a tolerant and soft diplomacy even with aggressively oriented international partners. The Chinese government does not have any choice because leading a much proactive diplomacy may result in hardships related to a provision of petrol to local vehicle owners, in spite of the fact that new arising companies have to seek for alternative sources of energy, especially bio-fuel in order to provide a complete financial, physical, and operational security. The increased use of oil-based fuel causes a strong environmental impact, which is additionally restricted with Kyoto Protocols. In fact, developed countries are supposed to meet the requirement of global warming reduction and emission of carbon dioxides meanwhile such developing countries as China are not included in the protocols. Nevertheless, such countries pollute the environment to a drastic extent. It is becoming increasingly apparent that China has become one of the biggest centers of environmental pollution, since consumer potential for car purchase has excessively grown and local organizations deploy vehicles for various purposes. Henceforth, dependency on fuel has respectively increased. China is often reported to demonstrate increased traffic rates, but such evidence is not abnormal for China itself. Still, attempts to normalize traffic excess throughout constructing more highways resulted in according harm to the environment as deforestation took place within the area of recently constructed roads. In spite of the fact that Chinese economy is in a state of a rapid revival, local people feel much more concerned about long run consequences of arising economic excellence of their country.

Demographic Factor

Expansion of the middle class in China is also determined with such demographic factor as urbanization, once many people are moving from villages to large cities. The arousal of leading industries in major cities and major economic zones causes a migration of populations from the countryside to the cities because of respectively growing opportunities in urban zones. As a result, urbanization of China leads to lower rates of performance in the agricultural sector. It is becoming abundantly clear that the country is less able to provide goods of the primary consumption, so that overall socio-economic impact is evidently adverse. Economic disparity arose owing to a recent tendency of consumerism in China. For example, such regions as Shanghai and Beijing suffer from negative impacts of consumerism much longer, as they actually originate this trend. Likewise, the situation is also worsened with city-to-city urbanization. This evidence implies the concern for safety of majority of cities and towns in China, especially in regards to a vague situation with employment. The wave of urbanization has caused a growth of crimes in the majority of Chinese cities. As a consequence, potential investors express much more doubts in favor of a positive investment decision. At any rate, the government takes reasonable steps towards solution of this problem, so that its negative effects are likely to be eliminated in the shortcoming future.

On a separate note, it is fair to mention the urbanization is a social and constant problem of China owing to its overpopulation. Consumerism is a side effect of this problem, but its persistence is strong in relation to Chinese economy. That is why the problem of urbanization should be solved at least in that regard. The problem can be partially solved without any intervention of the government, as overproduction will make all products and services available in rural areas. The government may have to intrude in the issue in order to promote employment opportunities within rural-based organizations. Since these offers are well-paid, local populations will return to agricultural sector because of possibility to increase their purchasing capacity.

Conclusion

It is appropriate to make a general comment on the fact that China emerges as a new strong competitive entity to global macroeconomics, but certain aspects of a trend on a local consumerism may negatively influence its economic excellence. The country manages to ensure its stable economic future even for times when the rest of economically developed countries may face particular hardships. Still, Chinese consumerism has caused certain economic risks that should be immediately addressed otherwise the economy may occur in a difficult position underpinned with political, social, environmental, and demographic implications. The main threat of Chinese consumerism is a high probability of overproduction within a long run, as local consumers seem to demand more as soon as their current purchasing needs are satisfied. That is why the government is placed in a difficult position, in which it has to reasonable limit the production and simultaneously orient local companies towards cost-effective production for macroeconomic purposes. China has all chances to become a leader that creates trends within the global market, but this leadership will harm the economy. Still, a risk of inappropriate policy-making still exists even though the government recently succeeds in launching reasonable initiatives.

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The Effects of Chinese Consumers on China's Economy essay

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