China's domestic market could be the recession buster we need

Late last week, amid falling export sales, industrial overcapacity, and massive unemployment, China's economy reported its worst quarter in almost a decade. Although GDP grew 6.1percent over the previous year, this was significantly lower than the 6.8 percent gain of the previous three months and the 10.6 percent gain reported a year ago.

Of course, industrial slowdowns are relative. At the same time in the United States, the economy contracted by 4 percent, and Japan's economy contracted by 6.6 percent. Still, for a country that has set itself a threshold of eight percent yearly growth as the bare minimum necessary to create necessary jobs and maintain stability, a drop to 6.1 percent is devastating.

China is attempting to halt the progress of its recession by promising liquidity to sustain economic growth. Moreover, it's four trillion yuan stimulus plan already seems to be bearing fruit.

China could, potentially, have a secret weapon: domestic spending. Although its citizens have an almost notoriously high savings rate, there are over a billion of them. If the government's attempts to improve its safety net, develop underused areas, boost jobs and inspire domestic buying play out, then China may well have the secret to its next boom.

It's worth noting that China's young adults are actually a fairly rapacious lot. A survey conducted by BIGresearch last year found that, while Chinese aged 18-34 are less likely to make small clothing and electronics purchases than their American cohorts, more of them were planning to buy a car. The numbers increased still further with bigger purchases: twice as many of them planned to by a home and almost three times as many planned to take a vacation.

While the global economic slowdown has certainly put a crimp in many of these plans, it's clear that the desire for big, expensive things certainly exists and, with the right push, could easily blossom into a booming domestic market. What's more, this could, potentially, be a rising tide that would lift a lot of boats. As President Obama tries to inspire his European colleagues to implement their own stimulus plans, China's successful stimulus could prove the argument that he needs. Add an awakened Chinese consumer market, and the economic slowdown might have an upside . . . or at least a way out.
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