Surprising many experts, Chinese car sales have become higher this year than in America. The demand for purchasing a vehicle is so high that there are long waiting lists for the most popular models of cars.
After years of huge spending and consumption, Americans are reacting to the recession in a frugal manner. In China, however, spending has grown steadily on an increasing number of consumer goods. The market in China has surpassed the U.S. for items including cars, washing machines and dishwashers.
For China’s population of 1.3 billion people, larger incomes are finally allowing a large number of consumers to purchase big-ticket items.
How long will this level of consumption last? The Beijing government is helping it along by allowing rebates, subsidies and heavy bank lending.
Automakers are hoping to sell around 12.8 million cars and small trucks in China this year, all manufactured in China. Appliance manufacturers are estimating 185 million sales of refrigerators, washing machines and other general appliances compared with only 137 million in America.
Chinese banks are playing a large role in consumer spending by financing double the amount of loans throughout China. Credit card spending has risen 40% since the beginning of the year.
However, this prosperity based on lending may be leading to problems in the future economy.