After World War II, America's "greatest generation" had built and grew their middle-class and pursued the "American Dream". Now China's growing middle-class is well on track to be China's "greatest generation" and pursuing their "Chinese Dream".
A generation ago the economies in Brazil, India and China were stagnant and left billions in poverty and provided very few opportunities for the vast majority of their citizens.
Fast forward to this decade, and the global financial landscape has drastically changed and now China is the world’s second largest economy with an unemployment rate currently about 6.1%.
Brazil created a record 2.5 million new jobs in 2010, for a total of 15 million new jobs that were generated in the last 7 years - and Brazil created close to another 3 million more new jobs last year. Their unemployment rate is about 5.5%.
Forbes reports that India is expected to create 10 million new jobs just with Wal-Mart.
But it's the workers in China who are on track to be the next "greatest
generation" of middle-class consumers.
According to Forbes, within the next generation, the middle-class in China will be roughly four times the size of the American middle class population. By 2030, China should have approximately 1.4 billion middle class consumers compared to the U.S. India will be next, with its citizens moving up the income ladder and reaching a sizeable 1 billion in a little under the next 20 years.
Forbes also reports via Oppenheimer Funds that multinationals are deriving larger portions of their earnings from the big "emerging markets". Over 60% of Nike’s 2010 earnings came from emerging markets, most of it in Asia. The same holds for Coca-Cola, which gets 70% of its revenues from outside of the U.S.
As a Chinese native and an American citizen, Helen H. Wang writes a very insightful article
for the Financial Post and says, "I believe the biggest story of our time is not occupying Wall Street...there is another story that has far-reaching implications – the rise of China’s middle
In Florida Michelle Rehwinkel Vasilinda writes, "In our future we will rely on middle-class Chinese, Indians and Brazilians to vacation here, send their kids here, and buy our homes."
writes [according to one report] "China's middle class is projected to reach 40% of the population in 2020, twice the proportion at the turn of the
century. The next ten years will be a crucial transition period in China's economic development. China's urbanization
rate was 47% in 2010, and by 2020, it is expected to reach 55%. During this period, some 150 million Chinese people will migrate
from the farms to become city dwellers."
Last year, the GDP of Beijing and Shanghai grew 8% and 8.2% respectively. Both cities were, according to Tu Qiyu in Shanghai Academy of Social Sciences, "laggards" in GDP growth compared to other major Chinese cities. Now compare that to 2.8% GDP in the United States.
China's rate of growth is more than enough to continue the expansion of the working and middle classes in China. Considering a population of 1.4 billion, if only 1% of them were moving out of poverty each year, it would be the equivalent of the population of Russia, and who would all of a sudden have a little extra cash to spend at the supermarket.
Last year the U.S. debt surpassed 100 percent of its GDP. The last time the debt topped the size of its annual economy was in 1947 during World War II, but then the deficit was driven by war spending.
Over 220 million Chinese have been lifted out of a "dollar-a-day" poverty since 1978, more than the entire U.S. labor force. In fact, the World Bank says that 59% of China’s population has been lifted out of poverty over the last 30 years. About when outsourcing escalated in the U.S.
Just during George W. Bush's two terms in office, the
U.S. had 52,000 factories move overseas. American multi-nationals have been
consisting using ever cheaper labor wherever they can find it in "emerging
markets" to increase corporate profits and CEO pay. Apple
is but one of many examples, and Steve Jobs even told President Obama,
“Those jobs aren’t coming back."
Richard Gao runs the $2.8 billion Matthews China Mutual Fund out of San Francisco and says, "We try to pick the stocks that are going to benefit from China’s growing middle class." If China’s middle class is growing wealthier, then investing in China might pay off too and make some buyers of China equity a little (or a lot) wealthier also.
China’s coastal cities have become the number one place on earth for luxury high rises. And like in the U.S., there is also a gap between the rich and poor that is widening. The rich are getting much richer. But, don’t they always?
China's middle class has been buying more and more "luxury labels" as well. The market for such luxury has extended far beyond China's roughly 900,000 U.S. dollar millionaires. The market is now being driven by China's burgeoning middle-class (with the truly rich going ever further upmarket). And they've even taken a likening to good California wines.
And the middle-class Chinese can now afford to travel and vacation too. The countries that accounted for the greatest increases in visitation to the U.S. in 2010 were China (with a whopping 53% gain over 2009); South Korea (up 49%) and Brazil (up 34%). New York is the top city for foreign visitors, followed by Miami, Los Angeles, Orlando, San Francisco, Hawaii and Las Vegas.
As China transitions from an export-led economy to a consumption-led economy, China continues to adopt a model in which every family owns a car (just like America's middle-class did back in the 1950s). And just as in the America, many middle-class Chinese are now raising concerns about the environmental and the infrastructure of the country.
Speaking of which, how has America's middle-class been doing?
Circuit City opened its first store in 1949 and pioneered the electronics superstore format in the 1970s. There were 567 Circuit City Superstores nationwide In 2009 it liquidated its last American retail store following a bankruptcy announcement.
Last month another popular electronics superstore chain Best Buy also made an announcement. The CEO Brian Dunn confirmed reports that the electronics retailer would continue to "shrink the footprint" of its bricks-and-mortar stores. But in a recent memo he sent to employees, he says not to worry about those shuttered outlets because Best Buy is opening up new stores - - - in China, for their middle-class workers/consumers.
Wal-Mart is now the second-largest retailer in China, behind Sun Art Retail Group Ltd. Wal-Mart executives
have said sales in China
during 2010 reached $7.5 billion from their 328 stores there.
But America's once-middle-class can't afford to buy anything anymore. As proof, just look at all the store closings in the U.S. in the last year alone, not counting small entrepreneurs. (A barber shop that I went to for 5 years also went out of business.)
- January 24, 2011 - J.C. Penney to close stores.
- February 17, 2011 - A&P and Pathmark to close 32 stores
- Abercrombie & Fitch closing 110 stores by 2012
- March 28, 2011 - Fashion Bug, Catherines Plus Sizes, and Lane Bryant will close 240 stores nationwide.
- August 22, 2011 - The Quiznos sandwich chain had 600 stores closed last year.
- October 17, 2011 - Lowe’s announced the company is closing 20 stores in 15 states.
- October 14, 2011 - Gap to close about 200 stores in North America as it expands overseas, nearly tripling the number of Gap stores in the People's Republic of China.
- December 08, 2011 - Teen retailer Pacific Sunwear to close up to 200 stores.
- December 5, 2011 - Apparel retailer Talbots will close a total of 83 stores by the end of the year and a total of 110 stores by the end of 2013.
- December 30, 2011 - Sears Holdings released a list of 79 of the 100-120 Sears and Kmart stores to be closed.
- December 30, 2011 - The Sofa Super Store chain is shutting down after two decades of selling furniture, saying it could no longer survive.
- January 5, 2012 - Macy's and Bloomingdales to close stores - Macy's Department Stores has decided to close five of it's stores along with four Bloomingdale's stores due to low business sales.
- February 15, 2012 - At least three local Hallmark stores are scheduled to close at the end of the month.
- February 16, 2012 - Four Mandee stores will be closing on Long Island.
Even our Defense Department is outsourcing American jobs. An important U.S. high-tech manufacturer is shutting down its American operations, laying off hundreds of workers and moving sophisticated equipment now being used to make critical parts for smart bombs to...guess where...to the People's Republic of China! (Also read: Defense Spending, Bogus Parts, Transnational Mergers, Outsourcing & Budget Cuts)
And are Britain's stores faring any better than those in the U.S.?
February 17, 2012 - A study of Britain's 500 biggest retail centers has revealed that, on average, 14 town center chain stores are closing down every day!
And in Greece and other European countries, they are also facing very
harsh austerity measures. But countries such as Brazil, India and China may
be the next economic leaders and new middle-class countries of the 21st century.
Meanwhile, let's just hope that the U.S. doesn't have any more store closings and more layoffs...and that the Republicans will never again control congress after November 2011. They've done enough damage to this country over the last 40 years by trying to appease their campaign donors and corporate lobbyists.