The real challenge for Chinese policymakers lies at home. While they have experience designing and implementing industrial policies, they struggle to mobilize Chinese consumers to spend to drive growth. Without fixing public pessimism about the economy, direct household cash handouts are unlikely to spur household spending over saving. Beijing’s biggest challenge is restoring policy credibility and market confidence.
Yep. That’s what led to Japan’s 40 year downturn – “thrift”. They couldn’t get people to spend money.
Fortunately that’s not a problem in America – except for perhaps a few multi-millionaire FIRE people who continue to LBYM.
intercst
While true, what does the aging Japanese [30% of population]need to spend money on besides healthcare? And health care in Japan is relative cheap as the government is involved in regulating pharmaceuticals and medical devices in order to keep prices low.
Well, I’m 77. This past year I’ve had a whole house generator installed (including 500 gallon propane tank), bought $20k in solar panels and backup batteries, a new car, taken trips to NY to see multiple broadway shows, 3 trips to Boston for family and other stuff, rehabbed part of the deck, worked on the lawn (damn dallisgras!), bought a small metal sculpture for over the fireplace, and the Mrs. has taken several week long jaunts to celebrate her 70th with friends in other parts of the country. We’ve also contributed to victims of the North Carolina hurricane, California fires, and Ukrainian food providers.
Oh, and spent over $20k in new teeth and back pain remedies.
That’s just off the top of my head, I’m sure if I went back through the 150 Amazon deliveries of the year I could come up with more.
It’s not hard to spend money if you want to. The problem is convincing people to want to if they aren’t of a mindset to want to. The Chinese, and to lesser extent Japanese have made saving an art form, good if you’re trying to amass capital, bad if you’re trying to get consumers to stimulate the economy.
A little conspicuous consumption on the part of thought leaders might help, dunno.
4 Likes
But oddly enough the bottom half of the American public in real terms may have spent less and less since 1981. In real terms.
Supply side econ is a giant sucking sound.
And, he thought 5 minutes later, a nice hefty bout of inflation should get people spending, no?
Deflation gets them to hold off.
We have deflation on order. Global.
News report today says they are allowing a Harry Potter movie to encourage more consumer spending. Looks like a step in the right direction.