December 11, 2009 09:12
China has become the world's biggest market for consumer goods including automobiles, home appliances and computers, overtaking the United States. Citing a forecast by market researcher J.D. Power and Chinese government data, The New York Times reported on Thursday that auto sales in China are projected at 12.8 million units this year, soaring ahead of the U.S.' 10.3 million units for the first time. China is also expected to notch up home appliance sales with 185 million units compared to 137 million units in the U.S.
China was already ahead in computer sales in the third quarter. A total of 7.2 million computers were sold in China until the third quarter, compared to 6.6 million in the U.S. China's consumer market is growing 17 percent a year, twice the rate of its economic growth. In contrast, the U.S. market is seeing a contraction in sales of products ranging from shoes and furniture to jewelry.
The main reason behind the rise in Chinese domestic consumption is government stimulus measures. Seeking to change its export-dependent economic structure, Beijing has been offering various incentives to consumers buying electronics, cars and farm machinery. It has decided to maintain the most of the measures this year, according to AP.
Press reports speak of the Chinese consumer's long-awaited "awakening." One indicator is that sales of SUVs, which are not subject to tax incentives, rose 72 percent in October compared to the same month in 2008. Credit card use in the first 10 months of this year rose 40 percent compared to the same period last year.
But Americans are still the world's biggest consumers. Only one in eight Chinese has a credit card, while in the U.S. plastic is ubiquitous. In money terms, private consumption in China amounts to less than one-sixth of the U.S. The NYT said this was because products in China are cheaper than in the U.S. and because transactions at hotels, restaurants and elsewhere in the service industry are included among consumer goods sales.
But China's savings rate is close to 40 percent, signifying Chinese consumers have plenty money left to boost spending. As 1.3 billion Chinese wake up to the joys of buying things, the country's market is expected to grow beyond earlier projections. Some experts say China's annual economic growth will reach 12 percent. The daily said there is a strong chance that China will be the "locomotive" that pulls the global economy out of the slump.
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