November 27th, 2009
05:36 AM GMT
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Driving around the Chinese town of Yi Wu, my crew and I were listening to the radio when an ad came on encouraging listeners to trade in their old TVs and washers for new ones.

"You can get a 13-percent rebate!" the speakers blared.

The government is going all out to promote its rebate programs and get its citizens spending. The manager of Xin Hong Electric, a store selling electronics and appliances, told us his sales were up as much as 30 percent. Not only can Chinese get discounts on new refrigerators, dryers or microwaves but cars too. Car sales were up nearly 80 percent in October compared to a year ago, driven in part by tax breaks and China's version of the U.S.'s "Cash-for-Clunkers" program. China is expected to overtake the United States as the world's biggest car market this year.

At Xin Hong Electric, I was struck by how many people were taking advantage of the rebate. We met up with a paper fan maker who had just bought a new fridge to add to his recent purchases: a TV, an air conditioner, a washer, and a microwave. He told us he had wanted to upgrade his appliances, anyway, and thought, why not do it now and save some cash?

That savers' mentality is said to have contributed to the imbalances in the world economy. Americans have been taking on too much debt and overspending, while Chinese (and certainly many other consumers in Asia) have been saving for a rainy day. Many economists say the government trade-in programs have had some success, but getting Chinese to feel comfortable spending will take a lot more work. They say the government will need to improve its retirement and health care programs so that people don't have to worry as much about paying large potential medical bills. The bottom line is consumers need to feel confident enough in the future to open their wallets today.

How confident are you in your home country's economy?



soundoff (31 Responses)
  1. gogo

    I am litle sceptical to China´s economical future. I know communists, they want control everything. even capitalism. they have not understood, that market controls them.

    November 28, 2009 at 12:24 pm |
  2. Bill

    Being a 29 year old American in the US, I can say I've seen some of the best and worst of the US economy. However, I am not in the least worried in my countries future. The boom days are over for the time being yet we don't have to worry about another big downturn. Unemployment will start to come down soon. I'm more worried about the bubble economy forming in China. With too much investment in infrastructure and too little money invested in its people, China is headed toward a road of political instability. The result of a major recession in China or worst yet a depression will have major implications on the US economy. With so much corporate profits reliant on China's growth, what will happen when that suddenly disappears? Suppose I'll just keep riding the China wave, hopefully I'll see the shore before the wave breaks.

    November 30, 2009 at 6:12 am |
  3. mary

    I am somewhat optimistic to the future of china's economy. China is no longer operating under communism, and with new age media and technology hiding things is becoming harder, they have come to slowly understand the new dynamics and make changes to their fiscal policy adding onto the degree of free market.

    My parents are still in china and personally there was no need for our family to renovate to newer appliances but many we know are taking this opportunity which will definitely boost the domestic as well as global economy.

    November 30, 2009 at 1:19 pm |
  4. Peter Lee

    The myth about free market mechanism relies on the theory of perfect competition. Unfortunately, there is no such environment in any part of the world. It will probably never exist.

    The U.S. and Western markets are dominated by big firms (capitalists) with little regulation. The ill effects can be clearly seen that the poor and the weak suffer and can hardly meet their ends. Many of these big organizations have been running their operation close to monopoly at extremely high profit regardless of all those so-called checks and balances. The recent financial breakdown is only one of many examples.

    Markets in China and most Asian countries are more regulated. The old communists ran their economy to the extreme of regulation. The fallback can also be seen easily with lack of individual incentive.

    Perhaps, there is a right balance somewhere. I hope both China and U.S. continue moving toward the right balance. From what we have seen in these thirty years, maybe we should be optimistic about our future, as neither pure capitalists nor pure communists exist in substance any more. The cold war mentality should give way to human progress.

    November 30, 2009 at 11:57 pm |
  5. Jonathan Foong

    I fully agreed with Bill, people is the asset of its country. China current economy policy is very worrisome. What is engine growth of China ? Their great balance of foreign reserves ? Can these reserves last how long or forever compare to people asset ? God bless China people ! American system still intact, is just that minority of evil and unresponsible Americans make up the current US economy crisis. It takes sometimes for those repossible and Intelligent Americans to dissolve this crisis, I am sure America will be backed on track soon.

    December 1, 2009 at 4:12 pm |
  6. In Chengdu

    They are having a great time in China right now...buying 14,000 cars a day, eating KFC, doing 'k' at KTV, not to mention buying all the name brand crap they can. China is rotting for the inside and everyone wants to play the blind man here...'just keep buying and wasting, my Chinese friends'. Check out what China's environment (now and what it) will be like in 20-30 years. They will be begging for drinkable water, food and fuel then....but hey, don't let me rain on their parade. Have fun while it last! :)

    December 2, 2009 at 8:31 am |
  7. gogo

    Peter Lee,
    I disagree. of course pure communism is scifi, even communists themself do not know what it is.( maybe some kind of bible heaven ) along the way of seeking pure communism milions of inocent people were killed. it ended up as fail.
    and pure capitalism?? yes yes yes, capitalism works, capitalism has results, lets make it as pure as we can. whenever capitalism is not pure enough, we have trouble like just now.

    December 2, 2009 at 11:30 pm |
  8. mark

    monoply strangulate the creativity in the western country.especially since the collapse of the Soviet union, there would not be any pression from the other side, so, why not slow down the competetion, enjoy the easy money?since the 1990,there have be not any breakthrough in the science . china as a developing country , still have some rooms to grow,if the western country reject to grow, china someday will catch up.

    December 3, 2009 at 9:48 am |
  9. NG14916

    China seems to be headed towards prosperity, but it should be careful. It could end up making the same mistakes that America did. As long as the government continues to regulate the economy prudently, however, that shouldn't be a problem. China's government might not have been elected by the people, but the Chinese have been blessed with wise leaders.

    December 3, 2009 at 12:43 pm |
  10. Suresh

    Chine recently anouce major uplift in healthcare. There is lot to do in healthcare in Asia. They need to create a priority based basic foundation 1st, Such as there is lots of talk about Hospital Information Systems in Asia. But no where to find real functionalites like drug interactions and allergy alert, health condition contraindications, key drug information etc. Where western systems can not fit, still how to achieve even better, visit: http://www.skanhealthcaresystems.info

    Also more information about Indian Healthcare:
    http://blogs.siliconindia.com/viewall/HospitalSystems

    December 4, 2009 at 2:37 am |
  11. lrmchinese

    china is china ,america is america ,they both have it's excellence and defact ,there is no perfect system of the world ,just depand on what time, what things and what the values of people,if the people feels happy that's ok ,china just opening up about 30 years ,facing a lot of social problems ,the goverment shoud solve it one by one .so if people feels our life better day by day ,and get more freedom step by step ,why not the 1.4 billion people thanks to the goverment ,I believe only like this ,can our chinese people have a bright future ,if we gain the freedom like peoples in us ,our chinese will be in chaos,coz people have diffent values ,have different educations,of courses different way of thinking ,believe it or not ,depands on you

    December 5, 2009 at 11:02 am |
  12. Paul

    As a native Chinese, I personally hold strong affection to my choutry, whereas , I am fully aware that the Communust Party remains incapable in terms of rasing their people's lives. In short, I can say that China is prosperous while the peope are impoverished, it is out of proportion. And I am sorry for China's government failed to show its due care to its people. Actually I still bear the ever-shining dream, that is things are going to take on a new look.

    December 5, 2009 at 1:44 pm |
  13. Jonesy

    The other factor that is a driver for the rebate program is to encourage the Chinese to trade in their old energy inefficient TVs, fridges, etc for greener alternatives. Additionally, this obviously helps fuel the domestic manufacturing base whilst financially troubled countries take time to recover and return to their pre GFC import levels which were driving China’s growth.

    The middle class (200 million+) here has not suffered as much as in western countries – it has primarily been the migrant workers who have been retrenched and they have flowed back to the rural interior and will return to the factories when good times start to roll again. Most of these workers are below the tax paying threshold and will not get unemployment benefits; so do not add a burden to the government as in foreign economies – (I am not saying that is a good thing).

    China has locked up critical natural resource deals all over Asia and Africa in the last three years and will remain a manufacturing powerhouse for many years to come due to the large, low cost, migratory labor resource.

    The benefit of the Communist government is that it can control the economy far better than free market led countries and is quite stable.

    December 7, 2009 at 2:37 am |
  14. Eric

    that 's total crab about china's economic recovery. just take a look at the prices of house and other commodities in China , they are going up even day by day,and the average income of people, no improvment,.People has no money more more expensive things, we call it recovery? We call it recovery when no signs of manufacturing industry booming?

    December 7, 2009 at 3:58 am |
  15. Karen

    With reference first to Bill's remarks regarding the potential political instability in China and subsequent posts reaffirming the views and different values held by the Chinese people, I think it is unlikely that an economic downfall will entail as a result of political dissatisfaction. Despite current protests within the country, most are primarily concerned with furthering the economic rights of the people, whether the Chinese are as concerned with a typically 'Western' political system remains to be seen. We should not underestimate the support of the Chinese people for the CCP, brought into effect through cultural traditions/strong nationalist tendencies, stringent education policies, a highly censored media etc. The CCP has adapted with each challenge it has faced – here's hoping it can continue – both in the way of further enhancing social and political rights, and in terms of its newly capitalised economy...I must say however that the majority of shoppers walking through the streets of Edinburgh laden with Harvey Nicols and Louis Vuitton shopping bags, is hugely disproportionate with the ratio of Chinese-Western people within the city!

    December 7, 2009 at 10:27 am |
  16. 杜毛告

    I am a chinese ,and i belive the program as the article mentioned will take china thhrough the crsis

    December 8, 2009 at 2:57 am |
  17. Leland

    I am a Chinese too. I agree that Chinese communist party has made mistakes before. I also have to agree that CCP has also lifted millions and millions of people out of poverty in very short time. No body is perfect and they have done far more good things than bad things. Who say Chinese don't have freedom of speech? If you can read Chinese, you will find out Chinese talking about all kinds of politics in their Chinese forums. of course, I have to agree that China still has a lot of room to improve on human rights but average Chinese citizens are happy with their Government now. Remember: people always pick what they want/like to listen. That is exactly what western media try to do with China (backward, no freedom, commies) and many western people belie what media say because these are what they like to listen (denying realities). CHinese government has a lot of challenges to face. but I am confident of my country. Please read recent article from Times "5 things learned from China".

    December 9, 2009 at 6:20 am |
  18. Lin

    Why there is no one asking how much America govement show it's responsibility to take care these millions Americans who are out of job for years? And during the same period of time, a lot of 'CEO's bring millions home?

    December 9, 2009 at 3:08 pm |
  19. Peter Lee

    Hi Gogo.

    Pure communism is based on a complete social system of sharing wealth while capitalism relies on a perfect market mechanism to enhance the value of capitals (wealth). Unfortunately, nothing like any of these two pure ideologies have happened in the world anywhere.

    Communism suffers big time from the deficiencies of lack of incentives for individuals and selfishness / corruptions when most of the wealth are forced into the community represented by government organizations. Only a small quantity of wealth was created and out of that only a fraction was actually shared by citizens. The rest mostly goes to some corrupted, selfish officials.

    Capitalism is threatened at best by both imperfect market mechanism and individual selfishness. There is a long story in basic Economic for the reality of imperfect market such as lack of speedy, totally free, low-cost, efficient markets. Selfishness can be clearly seen in many instances of our capital world. Many bankers and executives, for example, will do everything they can to maintain or increase their bonus even they may reduce or risk the capital value of their investors. Not only that, financial crimes and frauds are far more abundant in the capitalistic world – check out China these days as compared to the old days and of course numerous major Ponsi schemes in America. At the ends, many people have been cheating or exploiting others (without being punished) to gain wealth in the imperfect market environment. The basic problem is wealth or capital (not the human socieity, not the environment, etc.) is the most important pursuit in a capitalistic world.

    As a result, all countries tend to lie somewhere between these two ends of the spectrum (between capitalism and communism or socialism). America right now is swinging toward a more social (such as health care reform) and regulatory (such as bank regulation reform) system, a step closer to the ideology of communism or socialism in substance, you could argue. Nevertheless it is still by far the more capitalistic country.

    One fundamental issue of all ideologies is, it is difficult to get rid of human selfishness. Otherwise, both communism and capitalism will likely work. In communism, you don't need government intervention; all votuntarily work to their best and share their wealth. In capitalism, all volunteer to play a fair game and not at the expense of the others and environment.

    One other factor that may sidetrack your thinking is democracy and freedom, which is nothing to do with the ideologies of capitalism and communism. However, capitalistic world tends to use democracy and freedom to promote "free" market environment while communism uses authoritarian government intervention to enforce "sharing of wealth". Maybe due to a more advanced stage of industrialization or cultural difference, some European counties follow a middle road with a bit of market mechanism, a bit of government regulation and intervention, a bit of socialism and a bit of environmental protection (common social goods). It appears these tools have not worked in its purity. Many countries including America and China seem to be searching for or experimenting a new, modified system to do their job.

    As lrmchinese correctly pointed out, there is no perfect system as yet. but I am confident human will soon find the right balance to continue progressing.

    December 10, 2009 at 1:38 am |
  20. Jonathan Foong

    Chinese government should make use of their curent great balance of foreign reserves to work on something that systemically toward self dependence with very little of outside inflow of fund needed. I am very sure with such a great balance of foreign reserves, it is the opportunity and possible to spend billions of dollars to get back billions of dollars in a appropriate time frame to achieve a complete roll over cycle. Spend on somethings that to get back at least the equal amount worth of spending within manageable fund turnover time frame. For example if I have a capital of RMB3000, I should spend on something I can get back RMB3000 within a month, by then I could keep rolling base on my RMB3000 month after month, of course ideally RMB3000 spent could be get back more than RMB3000 to have extra to save for bad days.

    December 10, 2009 at 10:14 am |
  21. John Ca.

    Never hit your banker in the eyes! United States banker China! 2nd larges holder of U. S Treasury Dept. 1789 Debt.

    December 10, 2009 at 11:36 pm |
  22. Rebecca

    For anyone who has been to China, he/she would've felt the energy, the buzz, the capitalism pulsating throughout the system.

    We can all make generalisations, and criticise, but let's not forget the inter-related/connected nature of the global economy.

    Attack the Chinese all you'd like, the rest of the world is beseiging China to encourage consumption, to adopt the Western model of spending beyond one's means. And that is not out of selfless motives.

    So yes, I personally find it tacky to see so many LV & Gucci bags on the street, but that is a far cry from the days where I only worn handed down clothes.

    December 11, 2009 at 12:58 pm |
  23. Jason

    Gogo, between you and Peter Lee, Lee's point is more backed up by the facts. If you want you make a stronger point, you better back it up; it sounds to me that you are trying to say that "capitalism is better for no reason except god blesses America." Remember the number of native-Americans killed by your pure Capitalists.

    December 12, 2009 at 5:05 pm |
  24. Jason

    Factually, America has an age of over 200 years. The present well-being is the result of the process of an accumulative development. However, considering that China is only 60 years old, it is not possible to expect China to do comparably well as America does. It is not fare to measure China employing the same standard that measures America.

    I would not compare China to America. As long as China is doing better in the economy, it is a good sign. And obviously America will walk out of the shade as time goes. Does either of the two doing better hurt the other? I don't think so. It'd be good news that America's economy recovers, so it would that China's does. I seemed to have sense the air of rivalry. China and America might not be friends, but at least they ain't enemies.

    December 12, 2009 at 5:26 pm |
  25. neo

    Every country or political system has its own pros and cons. China is rising by sacrificing its environment. Corruption of the polical system is resented by majority of the Chinese people. All these will be in due course bear its own consequence, and Chinese people will pay dearly. But don't forget, that the Chinese have survived the world for thousands of years with its own unique value and history. The Chinese people have the courage and wisdom to continue perserve its culture and heritage and contribue to the world civilization. Nothing can stand in our way!

    December 14, 2009 at 3:06 am |
  26. Julian

    I am an Australian living in Nanning, the capital of Guangxi, China. There is literally building going on here day and night here and as a result there is a beautiful, new shiny city on the northern side of Nanhu lake which divides the old city from the new city.

    However, what you notice is that most of the apartments and office space in this part of town remain empty depite the building boom going on abated. It's lovely to wander through Admiral city, Nanning's brand new department store, not far down the main road from Dream Island deaprtment store and the Guangzhou Friendship Store. However, just it's counterparts down the road, people are most conspicuous by their absence here. This is even more interesting since in the old town it's standing room only. I don't want to be a naysayer or rain on anyones parade but I just can't see how this type of development can sustain itself in the long term!

    December 16, 2009 at 7:52 am |
  27. KiChan

    Economists say that "savers' mentality is said to have contributed to the imbalances in the world economy. Americans have been taking on too much debt and overspending, while many Asians have been saving for a rainy day have resulted in chaos". Not withstanding the trash from the mouth of economists, I'm happy to note that the foolishness of Americans is not that widespread in Asia, if not the world will soon be a junkyard.

    I'm Chinese living in Dubai and witnessing the problems firsthand

    December 22, 2009 at 8:56 am |
  28. Kachi

    History tells us China was once the greatest nation in the world.

    We have all witnessed China's amazing development, more evidently in last 15 years. China is experiencing its own industrial, social and political revolution. It is simply an evolution of a nation.

    It is defintely not the same Communist ideology, and certainly not Democracy. Evolution will envitebley bring about change.

    and what will become of China in the next 50 years ?.

    One thing is for sure, there will always be taxes and death.

    December 26, 2009 at 4:58 am |
  29. Will

    WooWooo!!! jump on board the India/China Express. Its the future. US is the past. If you don't believe it, ask the British, French, Spanish, Romans, Greeks etc what happened to their empires.

    December 29, 2009 at 1:07 pm |
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