World Economic

GUANGZHOU, China — For the first time, Chinese will buy more cars this year than Americans.

And China’s voracious demand is not just for cars. In more and more categories, China is surpassing the United States as the world’s biggest consumer market.

The Chinese market is "on full tilt — booming is an understatement these days," said John Bonnell, the director of Asia vehicle forecasting at JD Power & Associates.

Retail sales in China are growing 17 percent a year after adjusting for inflation, almost twice as fast as the nation’s overall economy, as rising incomes are finally making large numbers of Chinese prosperous enough to make big-ticket purchases.

To help fuel consumption, China’s government is offering rebates and subsidies, while Chinese banks are pushing more lending.

The proportion of car sales financed with loans has doubled this year, to nearly 25 percent, although most Chinese still head for dealerships with bricks of 100-renminbi notes, each note worth about $14.62. Credit card spending rose 40 percent in the first nine months of the year compared with the same period last year, yet China still has just one credit card for every eight people, compared with two credit cards for each American man, woman and child Low fee payday loans.

For years, the U.S. has pushed China to increase domestic consumption and reduce its dependence on exports — that’s because its overdependence on exports has distorted global trade. If the trade imbalances can be reduced, Americans will have to spend less as the dollar gains strength, and China will be able to buy more of its own goods, building up less lopsided foreign reserves.

China’s rapid consumption growth also is good news for the whole world, providing another engine to pull the global economy out of recession. And in some cases, sales in China are surpassing sales in the U.S.

Appliance manufacturers, for example, expect to sell 185 million refrigerators, washing machines and other kitchen and laundry equipment in China this year, compared with 137 million in the American market..

China’s growing consumerism, however, may not be all that beneficial to U.S. factory workers.

Automakers, for example, are on track to sell 12.8 million cars and light trucks in China this year, compared with 10.3 million in the U.S. Virtually all of them are being made in China (although many are foreign brands).

Source