My first visit to China occurred in 1994. Here’s what I recall:
1. Beijing was a very poor, drab, gray city. I recall reading that very few people owned a phone. The upper middle class (college professors) lived in slums. Everyone rode bicycles. Not bicycles like ours, but old rickety bikes. Home appliances were rare. Drab clothes. People were thin, because there was little rich food to eat (like meat or pizza.)
I’ve been back 5 times, most recently in 2009. I’ve traveled all over China. Here’s my current impression:
2. The cities are far more colorful, with many sophisticated stores, restaurants, nightclubs, etc. The middle class lives in modern apartments. Most people have telephones (at least in the cities), often cell phones. Lots of people have home appliances. Much nicer clothes. The streets are now clogged with cars. I read that China’s car sales have now surpassed America. People aren’t as thin–there are many more rich foods to eat.
Here’s Karl Smith’s impression of Chinese consumption:
People are worked to the bone, but have little to show for it. Their roadways and office complexes are massive, but rice takes up half of the family paycheck. Everyone has a job, but no one can afford new clothes. Kids drop out of school at 14 because being a day laborer pays nearly as much as being a doctor. Besides, they’ll have to save for a decade before they can afford a new car and then work double shifts to pay for the gasoline.
So who’s right? Maybe we both are. Maybe China’s big enough for both realities to be correct. Maybe a country that grows at 10% a year for 30 years can see consumption fall as a percentage of GDP, and still see mind-boggling changes in the LEVEL of consumption.
This post doesn’t really have a point, other than that China’s bigger than any generalization. Or that any generalization about China will be wrong. Except this one.
PS. In this post Karl Smith does a good job explaining why the Krugman critique of China has nothing to do with their exports to America. Krugman would be just as angry if China didn’t export a single item to the US, but continued to save as much. That’s the argument I push back against in this blog, not the vulgar protectionism that Ricardo discredited 200 years ago. Don’t even waste my time with “Chinese imports steal US jobs” arguments.
PPS. If anyone’s stealing US jobs it’s Fisher, Plosser, Kocherlakota, etc.
HT: Becky Hargrove