China is a country which is arguably obsessed with tradition, However, according to a YouTube video (in reference list below) China’s new wealthy middle class are facing a tough decision between the tradition of thriftiness and the ability to spend. Although the video goes on to list other contradictions within modern China and its population including the will to maintain traditions yet the desire to chase modern fashions, this blog post focuses specifically upon money.
Frugality is a traditional part of Chinese Culture (Lu, 2008). According to Lu (2008) the classic Chinese text Dae De Jing states that frugality is one of the three greatest treasures. As a result, the new middle class, which have found themselves with extra money to spend, face a tough battle between the desire to consume and a culture which urges them to save as much as possible. Personal saving rates in China are incredibly high in comparison to the rest of the world (Lu, 2008). Some households save up to 30% of their income and this means that when the time comes to purchase a house it is often done in cash (Lu, 2008). However, from an outsiders perspective this frugality could be interpreted as ‘being tight’. If you have the money to buy nice clothes, fast cars and flashy homes why not? It is this exact mentally which is working its way into the new Chinese middle class causing huge contradictions between traditional ideology and modern capabilities.
China’s middle class are a rapidly growing segment of the population. By 2015 the Communist state will hold the world’s fourth largest concentration of wealthy people with 4.4 million households earning $36,500 annually (Atsmon and Dixit, 2009). As a result of this rapid change in population, China has witnessed a equally as rapid change in spending habits. Car, real estate, banking, electronics, high-end fashion and other luxury goods and services have seen a huge increase in demand (Atsmon and Dixit, 2009). This insinuates that tradition is losing the fight against modern temptations.
China is a country of contradictions. As the super rich buy their fifth or sixth home, the middle class are aspiring to show off their financial capabilities (Rapoza, 2013). Although, we must shy away from concluding the whole of China’s middle class is turning it’s back on tradition, in the future this seems ever more likely. As China progresses further economically, luxury goods companies are seeking to crack a market within which consumers have increasing amounts of spare income (Atsmon and Dixit, 2009). Despite being a country which prides itself on its history, culture and tradition, growth has brought with it an desire to modernise and most importantly of all, an insatiable desire to spend.
Atsmon and Dixit (2009) ‘Understanding China’s Wealthy’, McKinsey and Company. [Available at – http://www.mckinsey.com/insights/marketing_sales/understanding_chinas_wealthy – (Accessed 16/02/2014)]
Brennan, B (2013) ‘Bizarre Things China’s Super Rich Spend Their Money On’ eChinacities, 21st of August. [Available at – http://www.echinacities.com/expat-corner/Bizarre-Things-Chinas-Super-Rich-Spend-their-Money-On – (Accessed 16/02/2014)]
Flannery, R (2013) ‘Inside The 2013 Forbes China 400: Facts and Figures on China’s Richest’, Forbes. 15th of October. [Available at – http://www.forbes.com/sites/russellflannery/2013/10/15/inside-the-2013-forbes-china-400-facts-and-figures-on-chinas-richest/ – (Accessed 16/02/2014)]
Lu, X (2008) ‘Chinese Money Habits – How My Culture Influences my Attitudes Towards Money’ WiseBread. [Available at – http://www.wisebread.com/chinese-money-habits-how-my-culture-influences-my-attitudes-toward-money – (Accessed 16/02/2014)]
Rapoza, K (2013) ‘The China Miracle: A Rising Wealth Gap’, Forbes. 20th of January. [Available at: http://www.forbes.com/sites/kenrapoza/2013/01/20/the-china-miracle-a-rising-wealth-gap/ – (accessed 16/02/2014)]