As the financial crisis forces American consumers to curb their shopping binges, the world starts to realize that China’s high savings level has some upsides, marking Chinese consumption as the most resilient in the world.
Beijing has to, however, be careful in how far it goes to encourage domestic spending to help the economy ride the global downturn. Credit-driven booms and consequent busts from the United States to South Korea are pointers to the need for caution.
About 75 percent of Chinese consumers plan to maintain or increase spending in the next 12 months, while almost 60 percent in the United States and the European Union expect to reduce spending, a recent Boston Consulting Group survey found.
Although economists have been saying China needs to reduce its savings rate to rebalance the economy, its high savings rate has turned out to be an asset rather than a liability for itself and the world during the economic downturn.
Chinese consumers are more insulated from the economic turmoil because they are less leveraged. Only 12 percent of Chinese said they are financially insecure, while more than a third of U.S. and EU respondents felt they were in financial trouble, according to the BCG survey.