// you’re reading...

Economic Crisis

Great Leap Forward: Cultivating China’s Consumer Class

Chinese frugality threatens to make chop suey of any economic recovery.

The U.S. obviously imports a lot of consumer goods from China. Recent estimates put the number of containers coming from China at 840,000 20-foot equivalent units for the month of June. To put that figure in some perspective, June’s Chinese imports amount to over a billion cubic feet of stuff, which would take about 1.5 million large-room storage spaces at Mini Manhattan Storage, or maybe half as many hoarders’ hovels, to house.

Until recently, this monthly mountain of goods bothered few people: economist Cassandras concerned about trade imbalances; troublesome labor leaders complaining about lost manufacturing jobs; prissy activists worried about sweatshop work conditions; grumpy critics of consumerism disgusted by disposable culture. Instead, most commentators tended to champion the inundation as a triumph of globalization, improving life for average Chinese and, more important, enhancing purchasing power in the U.S.: more Americans suddenly had the opportunity to repeat the pleasurable experience of buying things far more often — at Target, if not Tiffany — especially since credit became so much easier for many of them to access, a necessary accommodation to balance the flow of imports. The money sent to China to pay for its exports reappeared on the global ledger as massive U.S. debt that trickled down by various means to all levels of American society, reaching even those who hitherto were regarded as bad credit risks by all but the most predatory of lenders. Still, everyday Americans were saving the world, creating jobs and opportunities for workers abroad, simply by shopping.

But since the financial crisis and ensuing recession, the temerity of China’s continuing its economic growth while Western economies stagnate has become more broadly bothersome. It suddenly has become conventional wisdom that, as Yves Smith put it, “a chronic trade surplus country exports both goods and unemployment.” We’ve had too much cheap stuff, and done to little to deserve it. Hence, some business pundits feel Americans (not banks or multinational companies, though, let’s not get crazy — their bonuses and profits have recovered nicely) must now take their austerity medicine to eradicate the trade imbalance. In the Washington Post, Steven Pearlstein preaches wage cuts as a means to solve the “fundamental economic problem,” in the U.S., which is not to fix rampant unemployment but “to get what we consume more in line with what we produce after years of living beyond our means.” Basically he believes America’s working class should be more like China’s: underpaid and self-sacrificing so that industry can be more “competitive.” Their standard of living should fall so that company equity holders and executives reap the rewards of “winning”.

Chinese consumers haven’t  learned to put aside capitalist calculation in their everyday lives in order to pretend to transcend its pettiness, as we have.

The C-level may like this advice, but it’s not likely to win too many converts among the voting classes, no matter how much Tea Partying they have done. As Matt Taibbi found, Tea Partyers are all for seeing someone else’s economic security undermined but have no interest in any austerity for themselves. They have always already suffered enough, and always at the hands of some undeserving Other, facts that the right-wing politics of narcissistic pettiness never ceases to play on. Accordingly, election-conscious politicians in the U.S. are eager to declare “currency war” on China instead and its strategy of maintaining a weak yuan, passing a bill that allows for the unilateral imposition of tariffs on “state-subsidized” Chinese imports. The logic apparently is that Americans are gluttonous consumers only because the exchange rate — not the exploitation of cheap Chinese labor — makes it so affordable. If only the yuan rose against the dollar, then suddenly China would experience expanded purchasing power and would begin importing more goods from the U.S., which would suddenly find itself more austere (thanks to a weakened dollar’s deflated purchasing power) and competitive without all that bother of having to improve productivity or drive down wages even further. The magic of exchange rates does it for them.

Assuming that a stronger yuan can cause a shift in the trade tides — itself a thorny proposition, as finance professor Michael Pettis explains here — we can’t necessarily conclude that this will automatically incur a change in the prevailing ideology in China. It can’t be assumed simply on the strength of trends in macroeconomic data that, when handed more purchasing power, workers in China will become eager shoppers in an orgiastic instant, despite China’s having far less of the retail and marketing infrastructure necessary — namely a vigorous and sophisticated national advertising industry and unhampered commercial media outlets — to sustain a consumerist boom. Yes, consumerism and debt levels are climbing among Chinese consumers, prompting this Real Time Economics post, which celebrates by declaring that “a little well-placed profligacy might yet do the world some good.” And McKinsey reports that Chinese consumers are “increasingly” emulating the behavior of their Western counterparts and are even more likely to regard “shopping as entertainment.”

Exporting the revolution: Chinese learn consumerism's tao of "now."

McKinsey also notes, however, that Chinese consumers are stubbornly fixated on use value and “focus on value so intensely that brand loyalty is often secondary.” Moreover, they are “among the world’s most pragmatic consumers, willing to make explicit choices about spending their growing income”; they are “especially protracted” in their decision making; they lag far behind the Western world in “what fits me” consumption, in learning the significance of fashion trends, in using adopt brands “aimed at satisfying emotional needs.” In other words, consumers in China have not yet developed the impulsiveness and emotional self-consciousness that makes consumerism really take off. Chinese consumers haven’t  learned to put aside capitalist calculation in their everyday lives in order to pretend to transcend its pettiness, as we have.

To address this backward insistence on rational behavior, McKinsey recommends that corporations “invest more in consumer education,” by which it means China should be more thoroughly saturated with marketing that breaks down pragmatism and supplants it with a more pliable and irrational mind-set. Here, finally, is something that Americans would have no trouble exporting, were it not for language barriers and the like. This is what more and more of the American economy is dedicated to producing: affective states, entertainment, fashion concepts, personal identity. More than ever, we produce ourselves through consumption choices (rather than adhere to traditional identities), and then disseminate the product through our social networks, creating value along the distribution chain in the form of signifiers enriched with meaning. We have perfected the emotional technologies of taste refinement. Now we would like to export them, perhaps under the guise of “freedom”.

If not without social class, China aspires to be without class envy, but it hasn’t yet fully adopted the neoliberal–consumerist solution of encouraging everyone to believe they are middle class, and rendering invisible everyone else.

Any consumer-reeducation initiative in China will immediately run afoul of the country’s established monopoly in ideological reprogramming: the Communist Party. China’s ruling regime is, in theory, dedicated to the pursuit of a classless society; in practice this entails the suppression of the more-flagrant forms of individualism and inequality that could foment social unrest. If not without social class, China aspires to be without class envy, but it hasn’t yet fully adopted the neoliberal–consumerist solution of encouraging everyone to believe they are middle class, and rendering invisible everyone else. Instead it has offered citizens a tenuous social safety net that requires them to set aside money rather than consume, and it has pursued policies, as Pettis explains, that favor investment over domestic consumption. (Thus boosting the renminbi, in his opinion, will “fuel even more real estate, manufacturing and infrastructure overcapacity without having rebalanced consumption.  Expect, for example, even more ships, steel, and chemicals in a world that really does not want any more.”)

But the Communist Party, as this Economist article suggests, is currently wrestling with the changing mores that come with a burgeoning consumer culture and whether to continue to try to suppress them — that is whether to to preserve the wage-stifling, industry-coddling aspects of its economic policy along with maintaining censorship and a kind of Confucianism of convenience, or whether it should accept the end of history and embrace “universal values.”

Conservatives feared that embracing universal values would mean acknowledging the superiority of the West’s political systems. In September, after the games, the party’s own mouthpiece, the People’s Daily, weighed in. A signed article accused supporters of universal values of trying to westernise China and turn it into a laissez-faire economy that would no longer uphold “socialism with Chinese characteristics”.

Unless China becomes more willing to outsource its ideology building to the West, and accept our expertise in fomenting the proper disregard for pragmatism and dismantling Confucianist anti-individualism, the global imbalances seem likely to persist, no matter how many shells are exploded in the currency war. The U.S. will continue to overconsume for the benefit of the world, until the world chooses to see that arrangement as less than beneficial in maintaining social control. At that point, exporting consumerism may no longer be an option for the West, and we’ll be forced to import authoritarianism instead.

Rob would love to hear from you. Drop him a line at horninggenbub [at] gmail [dot] com.

*     *     *

Follow Generation Bubble’s link feed on Twitter: account name “GenBub_tweed.”

And join Generation Bubble on Facebook: group name “Generation Bubble.”

Related Posts:

  • Delicious
  • Facebook
  • Digg
  • Reddit
  • RSS Feed
  • StumbleUpon
  • Twitter
  • Google

Discussion

No comments yet.

Post a comment

Anton Steinpilz

Rob Horning

Ylajali Hansen