Li Wen, a mother of two, is on a shopping trip that is transforming the planet. As she pushes a double-decker trolley through her local Wal-Mart, the Shenzhen businesswoman looks the epitome of the global consumer. The goods she picks — rice, chicken, tofu, cooking oil — are not that different from those that a shopper in London or Tokyo might choose, nor is the amount, £106, she spends.
It may be hard to imagine a less exotic image of the Orient, but this is the new China dream. And by achieving it, Li and her trolley are at the vanguard of one of the most dramatic developments of our age: the rise of China from an inward-looking agricultural nation to an industrial behemoth that is scouring the planet for energy, food and minerals.
After 25 years of rapid development, China has established itself as the workshop of the world. Now it is moving towards a new phase — from mass producer to superconsumer — that could lead to one of the biggest redistributions of the planet’s resources in history.
A global shopping expedition is already under way. Its buyers include the Chinese businesspeople who have started to prospect in the Sahara and Siberian tundra; the traders who are dictating world prices for commodities and shipping; and the diplomats and military attaches who have been sent on a geostrategic charm offensive.
After famine, anarchy and war, few could begrudge China a taste of the good life. But the change is on a frightening scale. As well as being the biggest business opportunity in decades, it poses an enormous risk for the global environment and balance of power. For many products, China has overtaken the United States as the world’s biggest consumer, and its appetite can only grow. While the living standards of the majority of the 1,3-billion population still lag behind those of developed countries, the government’s priority is to create hundreds of millions more consumers like Li.
Given the poverty in the countryside, where many families subsist on less than $1 a day, China has a long way to go to catch up with the West.
But Li is testimony to the speed at which things can change. Ten years ago, she shopped at a local street market, rarely spending more than £10 a week, and carried her shopping home on foot. Today, she splashes out 10 times that amount on food, and £600 a month on clothes. Since moving to the boom city of Shenzhen in southern China, the family’s real estate and share-trading business has funded a three-storey villa worth £430 000, a new Volkswagen Touareg, and travel overseas at least three times a year. ”Compared to 10 years ago, I feel I know more about how to lead a good life,” she says.
It is a lesson being learned all over the country, but especially in Shenzhen. No other city has benefited more from the embrace of globalisation. When Deng Xiaoping launched China’s opening-up policy in 1978, Shenzhen was a fishing village. Today, it is a free-trade zone of skyscrapers, hangar-sized factories and malls. The population has surged to 12-million and with income levels twice the national average, municipal officials boast that their city is China’s richest.
This wealth has been generated by Shenzhen’s role as a checkout counter for goods arriving and leaving the Pearl River Delta in the freighters and supertankers. The Yantian port, which was marshland 10 years ago, now handles more than 12-million containers a year.
Until recently, the story of China’s economic miracle had an exclusively supply side plot as farming villages transformed into low-cost manufacturing bases. But now its ability to make and sell has become increasingly dependent on its power to buy and consume. This is transforming relations with the outside world. Instead of just making cheap things for rich nations, China has started to become a rival buyer.
Foreign-owned factories, which make goods largely for export, are still the main source of demand. But domestic consumption is also becoming globally significant. Although average incomes are less than a twentieth of those in Europe, the population is so much larger and prices so much cheaper that China has become the world’s biggest market for TVs, cellphones and just about every household appliance. Since 1978, electricity consumption has risen sevenfold and beer sales have risen 60-fold. Computer sales more than double every three years and the number of new car owners is increasing by two million a year.
Once self-sufficient in many primary products, China now gobbles up global resources. Imports rose 40% last year as it surged past the US as the most important player in global commodity markets. According to the Asian Development Bank, China took 40% of the world’s steel, 30% of its coal, and 25% of its aluminium and copper. It is now a major importer of grain, soya and even rice because so much farmland is given over to factories, malls and housing.
In the past two years, Chinese demand has been credited with pushing international commodity prices to record levels. China has accounted for 40% of the growth in demand for oil over the past four years, overtaking Japan last year as the second biggest importer. With a trade surplus of $10,4-billion, foreign exchange reserves of $745-billion and a currency that strengthened this year for the first time in 10 years, China can afford to spend. Recently, it has bought — or bid for — $24-billion of US Treasury bills, fleets of jumbo jets and companies such as IBM, Rover and Marconi.
It has also started to snap up any energy resources, no matter the economic or political expense. Since the US, Europe and Japan have tied up the majority of the most accessible supplies, Beijing has had to shop where oil and gas are technologically or politically more difficult to extract, striking deals with unsavoury regimes in Iran and Sudan.
China’s surge has led to frightened cries in the West, particularly in the US, of ”The Asians are coming!” The huge congressional campaign to block Chinese energy firm Cnooc’s bid to buy US oil firm Unocal this year highlighted the protectionism in Washington.
In economic terms, such fears are premature. Average incomes only passed $1 000 last year and the US Treasury believes they will not catch up with those in the US for 38 years even if China sustains its current level of growth. That is highly doubtful. China faces many risks, notably a widening wealth gap and environmental destruction. Recent rural riots have raised the possibility of social implosion.
Chinese diplomats say overseas commentators exaggerate China’s strength. ”China has a huge population so, of course, after 10 years of development, our purchasing power has increased considerably and our people want a more comfortable life,” said Wang Huijun, a deputy director of the Chinese Foreign Ministry. ”But this does not represent a threat to other countries. We are still a poor developing nation with basic needs: to eat and drink … It will be impossible for China to reach the living standards of the US or Europe within 50 years.”
But because China’s population is more than four times bigger than that of the US, the shift in the balance of global spending power will come far sooner.
Increased Chinese consumption is the world economy’s best news for decades. Just about every major manufacturer and retailer has moved to China in the expectation that its shoppers will drive global growth. If this proves true, hundreds of millions will follow Li’s route to a Western standard of living.
That is likely to be the more immediate threat of China’s rapacious appetite. The past 25 years of economic growth have devastated China’s environment; another 25 could do the same worldwide. The Earthwatch Institute says that if China’s 1,3-billion people consumed at the same rate as Americans, global production of steel, paper and cars would have to double, oil output would need to rise by 20-million barrels a day and miners would have to dig an extra five billion tonnes of coal. If they followed the US appetite, China would chew its way through 80% of current meat production and two-thirds of last year’s global grain harvest.
Lester Brown, the president of the institute, believes the squeeze on global resources will come far more quickly than policymakers are prepared for. ”China is telescoping history. It forces us to focus on what happens when huge numbers of low-income people rise rapidly in affluence,” he says. ”Chinese consumption shows the need to reconstruct the world economy.”
Now that China has tasted the good life, there is no going back. Li will not unilaterally scale back her shopping. ”Why shouldn’t a developing nation like China consume more? We have an equal right to pursue a better lifestyle. It is all very well to say we must protect global resources, but that is not just our responsibility.”
It is the new creed of China: ”We have as much right to shop as you.” It is the very familiarity of the image of Li and her trolley that should concern the world. The more Chinese become like us, the more we all must change. — Â