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China's struggles with a consumer society
China's perennial underconsumption could very well stem from the country's political system that focuses on stability and control, which is essentially at odds with the free and individualistic behavior that underpins a consumer society – at least, as we know it in the West.
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A woman walks past a clothing store at a shopping mall in Beijing on Dec. 3, 2024. (AFP/Adek Berry)
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hina’s engineering prowess has been nothing short of extraordinary. From world-class infrastructure and eco-friendly cities to space systems and high-speed trains, China’s impressive accumulation of state-of-the-art physical capital has played a dominant role in driving its economy.
But China’s physical engineering accomplishments on the supply side have not been transferable to social engineering efforts on the demand side, especially in stimulating consumer demand.
The disconnect arises out of the modern Chinese political system, which emphasizes stability and control. While this focus has enabled the country to become the world’s “ultimate producer”, it has not been successful in uncovering the DNA of the Chinese consumer.
Social engineering through government diktat stands in sharp contrast to the incentive-based, freewheeling, individualistic spirit that shapes human behavior and consumption patterns in the West. With the household consumption share of Chinese GDP remaining below 40 percent, compared to around 65 percent in advanced economies, China has little to show for its long-standing rhetoric on consumer-led rebalancing.
As famously documented in John Kenneth Galbraith’s The Affluent Society, the American experience decodes the DNA of a consumer society. Key characteristics include upward mobility of income and wealth, open communication and dissemination of information, individualism and freedom of choice, diminished inequality of lifestyles, intergenerational wealth transfers and ultimately, the ability to elect political representatives. Western consumerism is very much an aspirational proposition.
That raises a fundamental question: Is China’s political system incompatible with modern consumer culture?
That question seems all the more pertinent in the face of China’s newfound techno-authoritarianism, which seems at odds with the basic freedoms on which consumerism is based. Recent technological advances (especially in facial recognition and other forms of surveillance), in conjunction with a social credit system and tightened censorship, are all but antithetical to the consumer society as we know it in the West.
