China’smillennialsarehappytousecreditforwantedgoodsandservicesGaoYuningfindsithardtoexplaintohisstudentswhowereborninthe1990sandbeyondwhyChinesepeopleusedto“buy”productswithfoodstamps.
“MyyoungChinesestudentsmayhaveheardfromtheirparentsaboutwhatlifewaslikeinthatperiod,butformystudentsfromtheWest,theyhavenoideaatall,”GaotoldChinAfrica.
“Theuseoffoodstampswasbasedonashortageeconomy,”saidGao,anassociateprofessoratBeijing-basedSchoolofPublicPolicyandManagement,TsinghuaUniversity.
Beginninginthe1950sandlastinguntilthe1980s,Chinasufferedsevereshortagesoffoodandgoodsasthecountryfocusedonpost-warreconstructionafterthefoundingofthePeople’sRepublicofChinain1949.Throughoutthecountryandineveryhousehold,peoplelivedafrugallifestyle.TheCentralGovernmenthadtoissuerationbooksforpeopletoreceivefoodandothernecessities,includingoil,clothesandbicycles.Thissystemensuredthatthedistributionofsupplieswasdoneonanequitablebasis.
Thingsbegantochangein1978,thefirstyearofreformandopeningup.Structuralreformswerecarriedoutinruralareasandcities;privateenterprisesbegantoboomandthemarketeconomybecamemoreactive.RationcouponsfinallystoppedbeingissuedandbecameapartofChina’shistoryaround1993,markingtheendoftheshortageeconomy.
GaodescribedthethreemainstagesChineseconsumershaveexperiencedinthepastdecades.First,duringtherationcouponera,peopleunderwentshortagesandthenhadsufficientnecessitiesfortheirneeds.Inthe1990s,theybegantoaccumulatewealthandpreferredmoreratherthanless,andbiggerratherthansmaller.Inrecentyears,Chinesepeople,particularlyinbigcities,havestartedtoseekahigherqualityoflife,materiallyandspiritually.
FollowingJapanandtheUnitedStates,agrowingnumberofyoungurbandwellersinChinachoosetolivetheirlivesoncreditasthecountrygrowsfromshortagestoaffluencewithalargermiddle-incomegroup.
Generationgap
InmodernChinesefamilies,itisapparentthattherearemanydifferencesbetweenparentsandchildrenaroundconsumptionandtheirderivatives.InSeptember2017,whenAppleInc.launcheditsiPhoneX,itwaslikeacarnivalforChinesemillennials.
“IhatetohesitatewhenIseesomethingIwant.Iwanttohaveitnow,”ZhaoQijun,oneoftheChinesemillennialurbanconsumerswhoarejumpingontothebuy-now-paylaterbandwagon,toldChinaDaily.
Actually,Zhaocouldn’taffordthesmartphone’s$999pricetag.Butitwasn’taproblemforthe25-year-oldbecauseconsumercreditservices,likeChinesetechgiantAlibaba’saffiliateAntCheckLater,allowuserstopayofftheirpurchasesininstallments.Attheendof2017,productspurchasedbyinstallmentrangedfromthe3Cs(computer,communicationandconsumerelectronics)itemstodailynecessities,accordingtoareportbyFenqile,aninstallmentshoppingplatform.Thismethodofpayment,however,lowerscustomers’sensitivitytoprices,makingitmoreacceptabletopurchaseexpensive,qualityproducts,saidthereport.
IncontrasttoZhao,whoispayingforinstantgratification,somepeopleprefertobuyadreamviainstallments.ZhuGuangyuanwasbornintheruralareaofChifengCityinInnerMongoliaAutonomousRegion.Hisdiligenceledhimtoacollegeintheregion;however,aftergraduation,hefoundhimselfunemployed.AnenrollmentnoticefromaBeijing-basedcomputertrainingorganizationcaughthiseye,buthecouldn’taffordthetuitionfee.Forhim,aninstallmentplanwasthebestchoiceatthetime.Byborrowing16,300yuan($2,400)fromaninstallmentplatform,Zhuonlyhadtopaypartoftheinterestforthefirstsixmonthsandthecapitalandtherestoftheinterestintheensuing12months.Thetrainingwasactuallyapreludetohisfindingadecentjobinhishometown,makingitpossibleforhimtoeventuallybuyhisownapartmentthere.
“It’seasiertopaybackwithinterestthantoborrowfromfriendsasafavor,”Zhusaid.Traditionally,peoplelendmoneybasedontheborrower’sreputationandtheirleveloffamiliarity.Therefore,thosebornrichorwhohavemoneyhavemanymoreresourcesattheirdisposal,makingthismethodunfair.
GaodescribedaprofoundchangethatistakingplaceinChinafromasocietyofpersonalrelationshipstooneofindividualcredibility,whichwillmaketheevaluationsystemmoreobjectiveandfair.
InasurveyconductedbyAntFinancial,mostyoungurbanpeoplesaidtheywerecomfortableborrowingmoneytofundtheirlifestyles.Thisincludedtakingenrichmentclasses,attendinggymclassesandeventippingonlinebloggers.
“Thisphenomenonislargelyduetothefactthatmillennialsaregrowingupinanenvironmentofsurplus,”explainedMeiFeng,ViceSecretaryGeneraloftheBeijingYouthChamberofCommerce.
InGao’sview,youngpeoplehaveabroadersenseofproductswhichincludenotonlytangibleitems,butalsoservices.“Theyarewillingtopayforthehappinesstheymayacquirefromanitemorexperience,”hesaid.
Consumptionupgrade
Historically,Chinaisnotuniqueintermsofitscurrentconsumptionupgrade.Asaresearcherwithamainfocusoninternationaleconomicsanddevelopment,GaocomparedChina’scurrentdevelopmenttotheUnitedStatesinthe1920sandJapaninthe1970s-80s.
“Inthe1970s,theJapaneselanguagewaseverywhereinItalianluxurystores,”Gaosaid.“AndtheU.S.magazineNationalGeographicboomwasduetoitsdomesticdemandforoverseastourism.”
Currently,China’sfashionconsumptionaccountsfor30percentoftheworld’stotal,makingitthetopluxuryconsumercountry,accordingtoChenWenling,ChiefEconomistwiththeChinaCenterforInternationalEconomicExchanges.Shesaidfashionconsumptionbymeansofoverseastravelore-commerceplatformsisoneofthemaincharacteristicsinthecurrentconsumptionstructuralchange.
Themainreasonbehindtheconsumptionupgrade,fromtheperspectiveofeconomicdevelopment,isthechangeinthecountry’sincomestructureduetoitseconomicgrowth.Theemergenceofamiddle-incomegrouphasbecomethemaindrivingforceoftheconsumptionupgrade.Whathascomewiththeincomestructureupgradeisthetendencyforpeople’sbuyingpreferencestobedifferentiated,accordingtoGao.
Alongwithhigh-endconsumption,therecentpublicofferingofChineseunicornPinduoduo,ane-commercewebsitebackedbytechnologygiantTencent,alsoremindstheworldoftheincreasingconsumerpowerofalargenumberoflow-incomeChinesepeople.Aunicornisaprivatelyheldstartupcompanyvaluedatover$1billion.
“Theconsumptionupgradedoesnotonlyrefertothemiddle-incomegroup,”Gaosaid.“Itiswhatismeanttobuildamoderatelywell-offsocietyinallaspects.”
Commentsto
China’sConsumptionSinceReformandOpeningUp
ShareofIncomeSpentonFood
HouseholdConsumption
Note:Engel’scoefficientmeasuresthepercentageofincomespentonfoodandisusedtoreflectacountry’sstandardofliving-thelowerthepercentage,thehigherthestandardofliving.
Source:NationalBureauofStatistics;designedbyPamelaTobey;CompiledbyBeijingReview