China To Take Measures To Promote Consumption

Discussion in 'Economics' started by ASusilovic, Jun 17, 2009.


    Now, that´s finally a good idea. China´s savings rate : 25 % of disposable income...

    Young Chinese Have a Higher Savings Rate and Many Want a New Car, According to BIGresearch's Q2 China Quarterly Survey

    Why are Saving Rates of Urban Households in China Rising?

    From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to ¼ of disposable income. We use household-level data to explain the postponing of consumption despite rapid income growth. Tracing cohorts over time indicates virtually no consumption smoothing over the life cycle. Saving rates have increased across all demographic groups, although the age-profile of savings has an unusual U-shaped pattern, with saving rates being the highest among the youngest and oldest households in recent years. These patterns are best explained by the rising private burden of expenditures on housing, education, and health care.
  2. 20 million formerly employed Chinese have lost their jobs as of February. That's just the beginning.

    A hundred thousand factories or more have shut down.

    The government in China is trying to hide the pain the Chinese Economy is undergoing.

    It will be hard to stimulate spending when consumers have no wages.

    It's plain to see that governments everywhere are trying the confidence game to stave off economic collapse - if they can convince the sheep that deflation hasn't set in, they can spur some purchases, buying themselves time to work on an exit strategy.

    ·Premier: China's economy is at a critical moment as it begins to recover "steadily".
    ·China should continue a pro-active fiscal policy and moderately relaxed monetary policy.
    ·The foundation for economic recovery was not stable and many uncertainties remained.

    BEIJING, June 17 (Xinhua) -- Chinese Premier Wen Jiabao said Wednesday China's economy is at a critical moment as it begins to recover "steadily".

    Wen told an executive meeting of the State Council, China's Cabinet, that economic performance had started to show positive changes, favorable factors were increasing, the overall situation had stabilized and was moving upwards.

    He said the government should continue a pro-active fiscal policy and moderately relaxed monetary policy.

    Investment growth kept accelerating, consumption maintained a rapid and steady increase, and domestic demand played a stronger role in boosting economic growth, said Wen.

    Agricultural and industrial production grew, and regional coordinated development was making progress, said Wen.

    The financial market was stable, and investor confidence stronger. Urban employment kept rising, and reconstruction of areas affected by last year's May 12 earthquake was speeding up, said Wen.
  4. After Bretton-woods was established it did not take that long for the baby boomers to consume and enjoy the huge increase in growth and credit consumption.

    The purchasing power of Americans could then be (and still to this day) subsidized by foreigners who would originally buy dollars with the promise of gold backing, then in 71 the dollar went fiat and the government had absolute control over the currency, that is when events really began to pickup, leading to the snl crisis, crash of 87, ltcm bust, dotcom bubble, and the subprime fiasco. These boom and bust cycles are getting shorter and shorter, so when is the ultimate tipping point that is the question everyone is trying to figure out.

    The chinese obviously have a different agenda rather than allowing consumption and letting the yuan float to allow a chinese middle class to develop. The US treasury market is the last bubble, the wealth that comes from it is as artifical as investors were getting from Madoff (madoff investors dared not to sell either until a certain point). When there are 30 million men that won't have wives by 2020, historically it only leads to one thing....
  5. Self Stimulation?

    (sorry, couldn't resist. we all know its a land army & aggression.)
  6. indexer