Chinese leaders are trying to boost the economy by floating the slogan: ‘To spend is patriotic’. Economists say a consumer boom may be a cure to the global downturn.
Says Standard Chartered’s chief economist Gerard Lyons: "We need to move to a more balanced global economy. This adjustment requires deficit economies in the West to spend less and save more and surplus countries in Asia and elsewhere to move more of their savings into spending."
The savings rate in China is among the highest; in the absence of a social safety net, Chinese people save for everything from medicare to old-age income security. "Building safety nets – social security and pension in particular – will run encourage Chinese people to spend more," points out Morgan Stanley’s Stephen Roach.
US Treasury Secretary Hank Paulson said he believed China had contributed to the global credit bubble by saving too much — and lending those savings to the US. Chinese media slammed his statement as "irresponsible and untenable?.
But the "patriotic consumption" campaign seems to suggest Chinese officials see spending as a cure for China’s economic problems – even if not the world’s. An article in the official Outlook Weekly magazine drew on a Marxist theory to say that when a country’s economy is sputtering, it was patriotic to spend. "We raise consumption to the level of patriotism as expanding consumption is more important for China’s economic development now," the article reasoned. "Active consumption is patriotic; to love your country is to love yourself."