China is on the way to become the largest economy in the world. With the growth of GDP, which is about 5%, to maintain this rhythm or similar, this is a matter of time Expected Sorpasso in the USABeijing, a field for this, monitors a policy that seeks to reduce China’s dependence on the external part, trying to stimulate consumption (generate internal demand that works autonomously) and achieve a kind of “partial autochia”, in which only what China cannot produce can produce from the causes of a greater motive (raw materials, some food products …). Although in the West it seems strange, China has serious problems with the first: it will not be possible that its citizens consume the level necessary for this component to gain weight in the GDP from demand. The factors that explain this curious “inability” or economic absence are multiple, but the truth is that if Beijing wants to overcome this absence, they should take note of what the Spaniards and their method of use do.
Recent report Author: JP Morgan This shows that the big problem of China with consumption is directly related to services. The Chinese consume much less services (restaurants, hotel nights, rest …) than the Spaniards or Americans (USA) that are generated This permanent quasi is a blindness in which it is usually an growth engine of any developed economyThe field on the contrary, the Chinese have relatively normal consumption of goods (food, computers, clothes, washing machines …), the problem is the services!, According to JP Morgan.
The Chinese society in itself gives a tendency to relatively small consumption in comparison with other countries discovered at the stage of development (China is already an advanced economy or almost in terms of per capita income). The great drawback, as noted above, consists in the consumption of services that hardly have weight within the limits of general consumption. For example, in the case of Spain, the opposite occurs, the final consumption of households is about 56% of GDP, and sometimes even more. Of all this consumption, more than 50% are devoted to the services, emphasizing the costs of restaurants and residence services (16% of total expenses), transport or personal assistance, according to the National Statistical Institute (INE). All these expenses have a large weight in countries with a developed economy, although it is true that in the case of Spain this is usually slightly higher from the singularity of our productive system and various preferences.
China is different
The case of China is completely unique, because it, in the same way, is in the antipodes of the advanced countries, despite the powerful development of its economy and the number of years that it already dominates in saving/investments against consumption. The model or GDP template should have varyed in relation to a more advanced economy. “The weight of China consumption in GDP is low, not only in comparison with the developed economy, but also in comparison with countries at similar stages of developmentThe household consumption was only 39% of China GDP in 2023, while the average value in the world is 56%. On the other hand, the participation of investments in China in GDP (41% in China compared with 26% of the average in the world) and the internal savings coefficient (44% compared to 27%) is much higher. The high level of savings, high investments and low consumption is widely perceived as important characteristics of the China growth model, but recently contributed to a structural imbalance between demand and proposalAnd continuous deflation pressure, ”they say from JP Morgan.
He Low consumption of China hides several important factsIn -first, the consumption of China is low, but not weak. The growth in consumption in China (in real conditions) on average by 9.6% in annual calculus in 2000-2009 and 9.3% in 2010-2019 (and slowed 5.4% in 2020-2023), one of the highest growth rates in the world. Low consumption is observed in a relative expression against strong GDP growth (10.4% in 2000-2009 and 7.7% in 2010-2019).
Secondly, the JP Morgan study shows that the main consumption factor is an increase in household income. A weak increase in consumption in recent years has been associated with weak growth in income. But this sometimes leads to improper perception that the low consumption of China is due to the low share of houses in GDP. This is not true. The affordable income of households is 43% of GDP in ChinaThe drawing is nothing low compared to the economy of the rest of the world. This is mainly because of Unusually high level of savingsWhat is related to the lack of a social security network in China, explain the experts of the American bank.
The key in the services
“Three, and, perhaps, the most important, low consumption of China basically reflects low consumption of services, more than low consumption of goods,” these experts explain. The comparison between China and Spain or the United States suggests that the structure of consumption is very differentThe field “Participation of the consumption of goods in GDP is almost the same. The weight of consumption services (46% in the United States, more than 50% in Spain, compared with 18% in China) almost completely explains the difference in the participation of general consumption, ”says JP Morgan economists.
Analyzing long -term data on the advanced economy, you can see how The consumption of services is slightly gaining weight, as these countries become richThe field is also confirmed by JP Morgan experts who analyzed the US consumption: “The history of US consumption shows that when the country is enriched, the participation of goods consumption tends to reduce, and the consumption of services will be increased. However, even when comparing between countries with various stages of economic development, the consumption of services in China is also much lower than in countries/markets, similar to what is lower, something lower or lower, lower, lower.
Services in China
JP Morgan experts offer several consistent and related reasons. Firstly, some components of the consumption of services are not poorly registered, and the most famous is the component of housing services, which until recently was not included in the maintenance basket. This means that part of the secret can be simply erroneous reading of Chinese consumption.
Another reason why JP Morgan exporters are also reasonable: since many services are not commercialized or cannot be exported (haircut or dinner in a restaurant), they usually have a lower price than their real value, for example, medical care, education, etc. Medical assistance is only 2% of China’s GDP (compared to 7.6% in the USA), while other social social Indicators suggest that the number of hospital messages is in life.
Thirdly, and even more important, “Chinese service sector underwearFor example, financial services, legal services, tourism, entertainment, sport, etc., the share of services, as a rule, increases when the economy is enriched, ”they explain from JP Morgan. In the Spanish economy and a significant part of the developed world, entertainment, hospitality or sports suggest that the growing part of consumption. Not only from the fact that this type of consumption generates, but also in what they can absorb.
While buying a TV or washing machine has certain spatial restrictions and a very intense decreasing maximum utility (the first washing machine helps and satisfies, but the second is usually not so useful), going to dinner, going to the theater or throwing the game on oars – these are classes with a decrease in marginal utilities, which are not very intense or even represent growing carbon monoxide, cargin What may seem like this as self -service. But the vision of the game or game on the oar can lead to greater satisfaction as its consumption increases (a greater understanding, technique and pleasure is achieved). It is here that the Chinese economy takes place for progress.
That’s why, “Underdevelopment in this section offers China a great potential to increase the consumption of servicesWhich we consider to be a priority in his policy. In fact, in recent political statements (for example, the National People’s Assembly (APN) of March and the April Assembly of the Politbura) the government ordered the increase in household income and contributing to the consumption of services, such as two priority tasks, ”these experts say.
The consumption of services not only has a greater growth potential than the consumption of goods, but it is also important to create new employment opportunities, soften the pressure of unemployment and maintain an increase in household revenue. Human capital is important in most sectors of services with added value, which implies that a large share of additional cost can be assigned to income (more jobs and more paid) compared to high capital and low income from labor in many advanced production sectors. “Even better, the increase in services depends less on the financial incentive. Although tax support for social infrastructure or related services is necessary, the most important is a transparent and coordinated political environment. This means that it is necessary to correct political obstacles created by regulating uncertain ones. Together with continuous liberalization of services“JP Morgan reported.
