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An iconic billboard in the quintessential boom city of Shenzhen features Deng’s famous statement that China's “basic line will not waver for 100 years.” If Deng was right, we are less than one-third of the way into the era of “reform and opening.” But four challenges identified by Premier Wen Jiabao in 2010, that growth becomes “unbalanced, unstable, uncoordinated, or unsustainable,” threaten the boom. The key to balance lies in increasing the consumer share of GDP, allowing China to create a modern consumer economy. Stability will depend on the government's ability to address grievances as the gap between winners and losers widens. Coordination is the great test facing the ruling Communist Party, of whether it can manage the politics of growth without fundamental changes to the system. Sustainability is an issue that has global implications, as citizens of a warming planet watch anxiously to see if China is successful in greening the boom. The fifth great challenge, left out by Premier Wen, may be the external one: whether the world is successful in making room for China.

China's Youth Fuels the Consumer Boom

Period: Prospects

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Meettheexpert

Shaun Rein

Managing Director, China Market Research Group

Shaun Rein is the managing director of the China Market Research Group (CMR), the world's leading strategic market intelligence firm focused on China. Before CMR, he was the chief of research for venture capital firm Inter-Asia Venture Management. He also was the managing director and China country head for e-learning software company WebCT, where he also ran the company's Taiwan and South Korean operations. He also served as the assistant director of the Centre for East Asian Research at McGill University.

Rein is a columnist for BusinessWeek's Asia Insight column and is regularly featured in varied publications including The Wall Street Journal, the Harvard Business Review, The Economist, and The New York Times. He is regularly interviewed by American Public Radio's Marketplace and NPR. He frequently delivers commentary on Bloomberg TV and CNN International TV. He earned his graduate degree from Harvard University focused on China's economy and received a BA with Honours from McGill University.

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So we see, we estimate, about 250 million emerging middle class, people who make between 6000 and 15000 US Dollars per capita per year. These are the people that businesses need to be targeting, because they’re going to keep growing. And so, because China’s becoming not export-led, it’s now becoming more consumption-led, it’s just going to keep growing. And I see 2-3 decades of pretty stable growth. You see, a lot of economists say that China’s household savings rate is very high, 40-50%. I actually completely disagree. I think that’s a very high school-ish way of analyzing the markets. If you go to people older than 50, absolutely, it’s probably 50-60% savings because they’re concerned about their social security, they’re concerned about their rising medical costs. But when we go out and we talk to youth, we find that they have an effective savings rate of 0. You know, they’re very similar to Americans. They go out, they buy on credit, there’s huge revolvers, these are people who...the girl who massages my feet, she makes about $120 a month, but she has a $300 phone which she changes every 6 to 9 months. So there is that optimism, there is that type of buying on credit, there is very low savings in that age group, which I think is going to continue to fuel economic growth here. So, if you were a multinational, or if you were a private equity firm, or a hedge fund, anybody that’s trying to invest in the China market, we really look at Chinese youth as that major driver for growth. And it's a very exciting community. If you look at the American baby-boomers, when they were 30 years old, they fueled the go-go 80s on Wall Street. They were the ones buying the Ferraris, the nice pens, the nice watches and now that they’re 60, they’re looking at medical care and everything about them. You’re finding the exact same type of culture, the exact same type of spending habits in China’s baby boomers now, who are about 30 years old. And they’re just going to keep on spending.

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“China's Youth Fuels the Consumer Boom | Shaun Rein | Prospects | The China Boom Project.”
The China Boom Project.
The Asia Society Center on US-China Relations.
1 June 2010.
Web.
12 May 2025.
<https://chinaboom.asiasociety.org/period/prospects/0/169>.
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