China Exporting – Love Is A Drug

China’s media machine is working hard on two fronts at present – one is the very public and sensitive issue relating to Tibet, the other is more subtle and relates to China weaning itself off its reliance on the US for economic strength.

Politicians, economists and general observers have long accepted that for China to thrive long-term it needs to transition from being the world’s manufacturing base to occupy a more balanced proportion of global consumption.

This week the nation’s state media is running with a different baton to the one which was ignited in Greece yesterday or the ones being wielded in Lhasa and the surrounding provinces.

Chiefly, the media’s stance is that China has become a nation of spenders - with a 13.1% annual increase in consumption over the past 5 years (albeit from a very low base).

China’s annual per capita consumption is increasing at more than the growth levels in investment and exporting yet it still lags the rest of the world by 28%.

Weakening US demand for Chinese exports is allowing domestic levels of demand to distort, with February exports to the US a third of the level recorded in 2007.

China’s per capita contribution to GDP stood at US$2,456 in 2007. However, consumption still amounted for less than 50% of GDP

One of the problems in China is the unbalanced accumulation and distribution of wealth, which means the majority of consumption is concentrated in pockets of society.

China may be one, if not the, primary market for mobile phone growth but one statistic reflects how the concentration of wealth may hinder the nation’s ability to wean itself away from a reliance on US and global export demand.

This is the fact Government officials believe China will become the biggest market for luxury goods by 2014 – amounting for 23% of the world’s demand for such products, despite huge taxes on such goods when purchased inside China.

It’s amazing how numbers can be juggled around to paint the picture wanted.