OPINION> Columnist
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OPINION> Columnist
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Shall we spend?
By Li Hongmei (chinadaily.com.cn)
Updated: 2008-12-05 14:19
Bai Ling, secretary at a joint venture, decided to enter for a race unfolded recently online with the aim to build up the awareness of thrift amid the used-to-be prodigal white-collar workers. The competition rules, which seems to be a challenge to Mrs. Bai’s spending habits, demand all the attendees live through a whole week on less than 100 yuan, and the one, who spends the least but is still able to lead a sound life, will be the winner of the race. Mrs.Bai said her company, export-oriented, was already experiencing a crunch in the face of the global economic slowdown. The managerial level has decided to suspend salary rise for all the employees from now on till things look up one day. ‘I’m considering now stashing away at least half of my income before retiring for emergencies and also for my remaining days, as export sharply receded in recent weeks and business in our company is slack with the increasing shrink of orders. I’m also thinking of looking for a new job, but not so many vacancies are available at the time and many employers are already undertaking job cuts,’ she said, strolling through the aisles of a supermarket yesterday. The race intended to encourage people to tighten their fists, as well as the current mindset of potential consumers, appears to run counter to the state stimulus plans announced last month, which is designed to get people to spend more. But from the other perspective, it also mirrors the tenacious thrift, an admirable quality in China, has become a have-to as the nation’s export-driven economy, unstoppable for decades, slide obviously, a prospect that has stoked people’s fear of unemployment, and that could force people to save up for education, retirement and medical costs. The government has introduced a subsidized health care system in the countryside, but most Chinese, rural and urban, still live in fear of medical emergencies. Even a Beijing-based analyst was once cited as saying, ‘ health care is so expensive and distorted that no matter how much you have, if you get sick you are going to end up poor.’ Additionally, the Chinese propensity to save is rooted in deep-seated memories of scarcity and a tattered social safety net that always warns people never to loosen their fists letting go any money. Admittedly, high saving rates cannot save the faltering Chinese economy, which is now in a desperate need of jump start. The $586 billion stimulus package, even though weighted toward bridge-building and highway-paving initiatives, also includes a range of incentives intended to get Mrs.Bai and her like to increase their spending. Last week, China’s central bank slashed interest rates by more than one percentage point. On Monday, the government introduced a subsidy in 14 provinces that would make it cheaper for people to buy cell phones, washing machines and flat-screen televisions. To offset slumping exports and a downturn economy, government analysts are now looking to the reservoir of potential consumers, the country’s hundreds of millions of high-saving peasants, to pick up much of the slack. ‘If we can boost people’s confidence and they spend more money, it will not only be beneficial to China but it will help stabilize the world’s economy,’ Zhu Guangyao, the assistant finance minister, said last week. ‘Yeah, I’m a good spender. If I have enough confidence in future, I’m ready to spend,’ Bai echoed the statement, grinning.
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