China’s middle class: larger than France, nearly the size of Germany
Dave Barboza has a piece today in the NYT called The Great Malls of China. [Insert wry comment here.] The article has a lot of interesting information, leading perhaps to the conclusion that the size of malls, not skyscrapers, ought to be the measure of a society’s commercial ambitions:
The South China Mall - a jumble of Disneyland and Las Vegas, a shoppers’ version of paradise and hell all wrapped in one - will be nearly three times the size of the massive Mall of America in Minnesota. It is part of yet another astonishing new consequence of the quarter-century economic boom here: the great malls of China.
Not long ago, shopping in China consisted mostly of lining up to entreat surly clerks to accept cash in exchange for ugly merchandise that did not fit. But now, Chinese have started to embrace America’s modern “shop till you drop” ethos and are in the midst of a buy-at-the-mall frenzy.
Already, four shopping malls in China are larger than the Mall of America. Two, including the South China Mall, are bigger than the West Edmonton Mall in Alberta, which just surrendered its status as the world’s largest to an enormous retail center in Beijing. And by 2010, China is expected to be home to at least 7 of the world’s 10 largest malls.
Chinese are swarming into malls, which usually have many levels that rise up rather than out in the sprawling two-level style typical in much of the United States. Chinese consumers arrive by bus and train, and growing numbers are driving there. On busy days, one mall in the southern city of Guangzhou attracts about 600,000 shoppers.
American malls run about a million square feet. China is planning 6-8 million square foot malls. China is the new Texas. However, what is really incredible in the piece is the statement that China “has a growing middle class that has swelled to as many as 70 million.”
France has 60 million people. Germany has a little over 80 million. The middle class in China will be larger than the population of Germany in a few years. Though China has hundreds of millions of rural people living on a dollar a day, it is creating middle class affluence on a scale and at a speed unprecedented in human history.
Economic development is a great, messy, sometimes nasty business. If China can lift its 1.3 billion people out of poverty, it will be an achievement for the ages. China has done a lot of things right: pegged its currency to the dollar, insisted on leading edge technology in its factories, avoided financial panics through its management of the banking system, avoided overleverage, curbed — where possible — hot money speculation, permitted reasonably free capital flows, invested in infrastructure, etc. Creation of a large domestic middle calss is one of the keys to the sustainability of China’s growth.
China, as we have noted repeatedly, also has great problems of corruption, banks stuffed with bad loans ($420 billion!), speculative excesses, and a world increasingly resistant to its growth in exports. If China can get to the point of sustainability of domestic growth without a big blow-up, that will also be a first in the history of economic development.