GUANGZHOU, China — For the first time, Chinese will buy more cars this year than Americans. Demand is so high that drivers put their names on long waiting lists for the most popular models.
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“I’m disappointed, but what can I do?” asked Zhang Ge Lu, a 28-year-old interior designer. He came recently with two friends to a row of dealerships here in southeastern China to buy a black Toyota RAV4, only to be told that he would have to wait two months for delivery.
And it is not just cars. For more and more consumer goods, China is surpassing the United States as the world’s biggest market — from cars to refrigerators to washing machines, even desktop computers.
The Chinese market is “on full tilt — booming is an understatement these days,” said John Bonnell, the director of Asia vehicle forecasting at J.D. Power & Associates.
China is pulling ahead at this particular moment partly because Americans, debt-laden and worried about their jobs, are pulling back. After decades of gorging on consumption, Americans are saving. And the Chinese, whom economists thought were addicted to saving, are spending more.
Among China’s 1.3 billion people, rising incomes are finally making large numbers of Chinese prosperous enough to make big-ticket purchases.
The question is: will they keep spending? The Beijing government is increasing consumption with rebates, subsidies and heavy bank lending. Whether China can turn the spending spree into the seeds of a true consumer society matters not just to China, but to the world.
For years, the West has pushed China to increase domestic consumption and reduce its dependence on exports — that’s because its overdependence on exports has distorted global trade.
To keep its export machine humming, China kept its currency undervalued to make its goods more competitive in foreign markets. The county beggared its own citizens, keeping salaries and bank deposit interest rates artificially low to support exporters.
China’s trade surpluses and extensive intervention in currency markets have led it to amass $2.27 trillion in reserves, mainly in United States Treasuries, mortgage-backed securities and other dollar-denominated investments, helping to keep interest rates low and finance Americans’ borrowing. Chinese parsimony enabled American profligacy.
If the Chinese buy more and Americans save more, a more stable global economic exchange can take shape. In the meantime, China’s rapid consumption growth is good news for the whole world. For the first time, China, not the United States, is a locomotive helping to pull the global economy out of a slump. But China’s tiny appetite for American exports means that the main benefit has gone to commodity exporters and to businesses in China.
Automakers are on track to sell 12.8 million cars and light trucks in China this year, virtually all of them made in China (although many are foreign brands), compared with 10.3 million in the United States. Appliance manufacturers expect to sell 185 million refrigerators, washing machines and other pieces of kitchen and laundry equipment in China this year, compared with 137 million in the American market.
In desktop computers, China moved solidly ahead of the United States in the third quarter, buying 7.2 million compared with 6.6 million in the United States.
Retail sales are growing 17 percent a year in China after adjusting for inflation, almost twice as fast as the overall economy.
Americans have been cutting back on purchases of everything from shoes to furniture to jewelry. But Chinese households are crossing a series of income thresholds at which cars and other big-ticket purchases become affordable.
At the same time, Chinese banks are stepping up consumer lending. The proportion of car sales financed with loans has doubled this year, to nearly 25 percent, although most Chinese still head for dealerships with bricks of 100-renminbi notes, each note worth about $14.62. Credit card spending rose 40 percent in the first nine months of the year compared with the same period last year, yet China still has just one credit card for every eight people, compared to two credit cards for each American man, woman and child.
While it is spreading creature comforts, China’s lending-based prosperity may also be sowing the seeds of future economic problems. China’s Banking Regulatory Commission recently told banks to show restraint in lending for the rest of the year, fearful that some of this year’s loans could become bad debts in the next several years, as happened with the mortgage lending spree in the United States.
The regulator threatened to block banks’ overseas investments and branch openings unless they can demonstrate adequate capital to cover risks.
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