Yves here. A fashionista colleague has been telling me for some time that luxury brands have been in the crapper for some time, confirmed by occasional stories at the Financial Times about the sorry state of big name luxury brandmesiters like LVMH as well as the soft state of the art market. Her point is that the very rich are doing fine, but the merely affluent and “aspirational” luxury buyers, who might spring for a high end bag, pair of shoes, or scarf have cut back or stopped entirely their fancy goods buys.
As for readers who might dispute the claims about the state of China’s economy, I suggest you read Michael Pettis on what Chinese GDP figures amount to: https://carnegieendowment.org/china-financial-markets/2019/01/what-is-gdp-in-china. A Reuters story on China’s latest GDP report confirms that the disconnect between official statistics and what many Chinese citizens are experiencing persists: “”The data China released was different from what most people felt”.
I can tell you here from the sex capital of Asia that China is in the crapper. The decline in tourism this high season v. last year is astonishing. The Europeans, Russians, and Australians tend to peak over Christmas and New Year although some stay well into January; the Chinese peak, natch, is before and a bit after Chinese New Year (this year, January 26). although many also come over Christmas-New Years.
Last year, traffic was awful from mid Dec to a week after Chinese New Year. Similarly, the big farang oriented malls were busy the entire time, often with long lines at registers and shopper buying many items.
This year, we had a long weekend bad stretch in November when three famous performers came for a music festival. Aside from that, the busy time was a few days before Christmas to New Year and even then not bad if you went out before 4 PM. Even the weekend after New Year was slack, activity-wise.
The entire time, the number of big Chinese tour busses is way down. Similarly, my building, which has a lot of short term rental units, was regularly noisy in the corridors and in the evening due to people talking loudly and often music and parties nearby and on the premises
This year, dead quiet. Creepily so.
Mind you, the dramatic shortfall was underway before the period when Chinese started dropping scheduled trips due to a high profile kidnapping of a Chinese actor, so that is only partly the cause. And one might think where I am would be somewhat insulated due to distance from Myanmar and the, erm, special local attractions.
By Teresa Sádaba, Dean at ISEM Fashion Business School, Universidad de Navarra. Originally published at The Conversation
Alarm bells are ringing across the high-end sector. 2024 did not end as luxury brands had hoped, and the figures published by the sector’s main conglomerates painted a picture of slowdown and some signs of exhaustion during the last quarter of 2024.
The weakening Asian market is one obvious cause, but consumers’ unusual reactions to sharp price rises has also been striking. Aspiration and distinction – which were part of luxury brands’ DNA until recently – are taking on new dimensions thanks to phenomena such as ultra-fast fashion and “dupe” culture (low-cost products that are inspired by or imitate luxury goods).
Poor Financial Results
The largest luxury goods conglomerate Louis Vuitton Moet Hennessey (LVMH) – owner of 75 brands including Louis Vuitton, Christian Dior, Moёt & Chandon, Hennessy and Veuve Clicquot – has presented quarterly results showing growth of only 3%, well below the 14% seen in 2023. In fashion, growth fell by 5%, and in wines and spirits, 7%.
For Kering, the sector’s second largest company – whose portfolio includes brands like Gucci, Balenciaga, Yves Saint Laurent and Bottega Veneta – revenues decreased by 6% and 4% on a comparable basis. The list of examples goes on, with legendary houses like Burberry and Lanvin publishing similar figures.
The results could be analysed in light of the last year’s growing panorama of global instability. 2024 saw intense geopolitical turmoil, with multiple serious open conflicts, burgeoning technological rivalries, and more than 70 elections around the world. This all brings with it a strong degree of economic uncertainty.
However, we cannot forget that the luxury market has been very resilient in times of crisis. The sector’s post-COVID crash results were surprisingly good: digitalisation accelerated, and the buoyant behaviour of consumers with a desire to splurge – a phenomenon known as “revenge spending” – helped significantly.
So what might this change in consumption mean, and what lessons can we learn from it? There are several significant factors that may herald a transformation in the world of luxury, and companies’ strategies will have to change if they want to keep up.
The Asian Dragon Economies Are Getting Weaker
One of the decisive factors in these results is the fading idea of China as a place of unstoppable growth.
In recent years, breaking into the Chinese market was the main ambition for these brands, their natural place of expansion and growth. Between 2009 and 2019, for instance, the LVMH group went from having 470 outlets in Asia to 1,453 (excluding Japan). The same is true for Kering, which went from 152 to 609 shops.
Collections and marketing strategies also shifted towards this market, targeting a growing and thriving middle class, which seemed to have no end in sight. However, the dragon economies are now showing signs of slowing down, and in the luxury sector, the drop in sales is becoming quite pronounced.
In the figures published by LVMH, a 16% drop in Asian sales (again, excluding Japan) is projected. This is especially pronounced in China, which previously accounted for 50% of the French group’s growth.
Lack of consumer confidence and restrained spending on luxury goods may explain this new outlook. But if China is not what it used to be, where can luxury brands find new winning strategies?
Prices Going Up and Up
The strategy of the luxury groups has been based in recent years on an extraordinary rise in prices. The escalation has been unstoppable, with the value of an Hermès bag doubling, and some Chanel bags reaching €10,000. Some of these pieces have also doubled in value on the second-hand market. The price of watches is another clear example, with increases of more than 20%.
It is natural for luxury brands to use price as a barrier to entry for mass consumption and as a way of preserving its exclusivity. It appeals to the ultra-rich or extremely wealthy, with the purpose of creating eternal aspiration – the Veblen effect, by which higher prices generate higher demand, has worked in this market.
The concept is named after Thornstein Veblen, economist and author of The Theory of the Leisure Class: An Economic Study of Institutions. In chapter seven of this work, entitled “Dress as an Expression of the Pecuniary Culture”, Veblen explains that fashion and luxury are status indicators. If aspiration is not constructed, luxury becomes meaningless.
However, there seem to be other reasons for this striking price increase. One widely reported reason is the higher cost of raw materials, but geopolitical uncertainty and runaway inflation in recent years have also contributed to the rise.
The Cost of Distinction
The entry of new players into the fashion world at the bottom of the pyramid has forced everyone to move up the ladder, and to find what sets them apart. Ultra-fast fashion has made mid-market brands want to be perceived as more aspirational, and this movement in turn leads luxury brands to seek greater distance from new competitors.
Some also point to “dupe” culture as the culprit for this steady price progression. Copies of luxury products – or imitations with slight modifications – have flooded social media, especially TikTok, forcing brands to distance themselves further from this type of consumption. Authenticity comes at a price.
The big question right now is how far this price escalation will go. Some people have asked whether the consumers targeted by these brands, no matter how great their fortune, also have reservations about spending for spending’s sake. In other words, do they really find value in the product?
Quiet Luxury: A New Approach
It seems that it is no longer enough to position oneself as a luxury brand – these companies also have to find a way to create and demonstrate value. Price increases need to be justified by two of the levers that have always been the essence of luxury: creativity and quality.
Additionally, luxury is no longer synonymous with brands. The trend of quiet luxury shows a desire to distance oneself from flashy aggressiveness by avoiding or hiding any logo or characteristic detail that makes its brand obvious.
This means brands are only recognisable to those who have a more cultivated knowledge of luxury products. Silent luxury potentially broadens the market to clients who, beyond products themselves, are also interested in their own wellbeing and a more relaxed way of life.
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https://carnegieendowment.org/china-financial-markets/2019/01/what-is-gdp-in-china?lang=en
January 16, 2019
What Is GDP in China?
Analysts are increasingly skeptical that China’s very high reported GDP growth rate provides a meaningful picture of the economy’s health. There are, however, at least three very different ways that reported GDP can fail to reflect the underlying economy.
By Michael Pettis
The profitability of high fashion and luxury is a thing of wonder. Just look at the list of richest people in the world – there is a very strong bias towards what is in global terms, a relatively small industry. The raw profitability of an LV or Gucci is staggering. Much the same applies of course to a range of ‘top end’ brands, whether cars or boats or whatever.
The industry itself will be fine. The advantage of having a strong fashion brand is not having to invest too much in fixed assets. Much of the ‘product’ is made by sub-contractors, so the people who will suffer most are the highly skilled craftspeople who make these products, not the owners. Even their shops are cheap to dispose of – the highest end companies rarely have to pay full rent (landlords consider them a ‘lure’ for other tenants). The exception may well be in the more highly engineering oriented sectors of ‘luxury’, such as luxury cars – there is a potentially vast over capacity issue which is particularly noticeable at the top end.
It should be noted of course that one big problem for western and Japanese/Korean luxury brands, which have been having many happy and profitable years in China, is that they are increasingly facing competition from new Chinese indigenous fashion companies, particularly in the ‘mid’ zones of cost.
The mismatch between China’s GNP and the ‘real’ wealth of ordinary Chinese people has been obvious to those paying attention for well over a decade, a time when Chinese GNP figures lost any connection with real world conditions (familiar to those of us in Ireland, who know well that ‘GNP’ can be entirely meaningless). As Pettis has been pointing out for years, Chinese GNP is an input into the economy, not an output in terms of real economic growth (however you define it). Even shadow measures, such as energy outputs, have become less useful in assessing real growth (technology changes has resulted in this applying equally to many other countries). Chinese ‘growth’ over the past few decades has been undeniable of course – but how much of this is real productive capacity (as opposed to inflated overinvestment) is a technical question and I doubt you’ll find any unambiguous answers to this question. But the only real certainty is that GNP is an entirely meaningless figure for assessing the real health of the Chinese economy.
The severe drop off of Chinese tourism in Thailand (its a worldwide phenomenon, equally obvious in Europe and elsewhere, partially masked by the number of Chinese moving to study or other purposes) may have other reasons, but I suspect it is primarily down to economic uncertainty, and particularly the drop in property values which has severely hit nearly all regular Chinese, most of whom use property assets as their main savings vehicle. And property values in China have a very long way to go down, income/price ratios are still at crazy and unsustainable levels. From my anecdotal experience, the upper layer of quite cosmopolitan Chinese are travelling as much as before (many to look over their various ‘bet hedging’ foreign investments). It is ‘ordinary’ upper middle income Chinese who are consolidating their financial positions and seeing a trip to Chiang Mai or Tokyo as an unnecessary expense (average’ Chinese have never been able to afford much in the way of frivolous foreign travel). When I was in Tokyo last year I was struck my how much mandarin I heard spoken in public areas, but it quickly became apparent that most of these were not casual tourists, but permanent or semi-permanent residents.
So unfortunately, it seems the ‘second China shock’ is on its way, and it will be a double whammy – cheap and very good Chinese implicitly subsidised exports combined with a very weak or non-existent quid quo pro in the form of Chinese tourists or imports. As Keynes pointed out many decades ago, this sort of mismatch in imports and exports is not just a solid indicator that conventional trade theory is wrong (it still is), but is highly destabilizing for the world economy. Its not just Trump or the Europeans who are concerned about this – pretty much all the Asian countries are realising that this is a problem for everyone, particularly countries like Thailand, Indonesia and Vietnam, which are hoping to follow the standard path to developed status.
The reverse wealth effect of lower RE prices and depressed job markets in big first tier cities definitely hits the consumption habits of well-to-do Chinese, but I think the availability of inexpensive and high quality alternatives within China may also play a role.
A friend traveled to Kunming last fall and was quite impressed by the pricing and quality of high end accommodations that he stayed at. He is a SF based foodie with Hong Kong roots, so nitpicked the local food offerings but admitted that they were pretty good and great value for money. Steve Hsu had a podcast where he gave impressions of a recent trip to China where he said that he thought the quality of things like hotel bedding and appliances are now as good as what’s on offer in the West. So how many upper middle class Chinese people, who already probably taken several foreign trips in their lives and likely didn’t enjoy them that much (not knowing the languages, very rushed schedules, a lot of time devoted to frenzied shopping, long travel time), might opt for a cheaper, higher quality in-country vacation by car or HSR? The comment on quality of design of bedding suggests that overall quality of Chinese designed and marketed products have caught up and there’s less rationale for paying a significant premium for high end European design.
While this would not negate the desire for the typical beach vacations or see Rome/Paris/Antarctica, this may well be the end of shopping frenzied mass tourism that used to characterize Chinese travel to SEAsia (on price) and Europe (on quality).
I wonder if 2023 was the aberration after being penned up in China under COVID restrictions, whereas 2024 will represent the norm going forward regardless of how the Chinese economy performed in any given year.
There was a small recovery in 2024 of Chinese tourists travelling abroad, but still well below previous numbers. 6.3 million Chinese tourists visited Thailand in 2024, compared to 11 million in 2019. It wasn’t just Thailand – Indonesia, another popular destination had 787,000 in 2024 compared to over 2 million in 2019. . Chinese visitors to France in 2024 were 70% of 2019 levels. There were widespread assumptions last year that 2024 levels would match previous years, but they were clearly far behind. This is replicated in internal China domestic tourism data – its still well down on pre-Covid years – around 30% lower than 2019 (you can google for figures, but most are hidden behind paywalls). All available data – including official Chinese government statistics – indicate a very significant reduction in both internal and external travel for Chinese people.
The quality of hotels has certainly increased a lot – I’ve been a regular traveller to China for 3 decades now, although due to restrictions there is always a limited type of hotels (up until recently) a western traveller can stay in, unless they had ‘connections’. I’ve stayed in everything from upmarket western hotels to military bases in remote areas (it was a handy source of income, albeit unofficially, for remote garrisons back in the 1990’s to accept travellers). The quality of local products has certainly increased very significantly over the past two decades, although as China is a vast country it is, as you would expect, be very varied. In my experience, educated Chinese are very comfortable travelling in other countries, far more so than Japanese or Americans.
https://english.news.cn/20250105/cc2ce8cb3bdc43fd96aec1ded3829998/c.html
January 5, 2025
Record-breaking travel reveals China’s strengthened economic vitality
BEIJING — China witnessed a remarkable surge in both rail and air travel in 2024, fueled by vigorous economic activities and robust consumer spending.
The country’s railway network handled a record 4.08 billion passenger trips in 2024, a 10.8 percent year-on-year increase, according to China State Railway Group Co., Ltd.
Similarly, the latest data from the Civil Aviation Administration of China (CAAC) shows that air passenger trips are estimated to have hit a record 730 million in 2024, an 18 percent year-on-year increase.
As a bellwether of economic growth, the record travel figures signal a steady rise in China’s consumption willingness, said Xu Hong, dean of the College of Tourism and Service Management at Nankai University.
This surge was partly driven by a growing thirst for leisure travel, with the tourism sector standing out as a bright spot of China’s economy in 2024, she noted.
In the first three quarters of last year, China reported 4.24 billion domestic trips, representing a year-on-year increase of 15.3 percent. The total expenditure of domestic tourists amounted to 4.35 trillion yuan (about 605 billion U.S. dollars), up 17.9 percent year on year…
Don’t you understand that Chinese economic data is false? Hasn’t that sunk in yet?
Thailand, a top Chinese destination, said tourism was and is expected to remain subdued:
https://www.bangkokpost.com/business/general/2920952/chinese-tourist-flows-to-thailand-likely-to-stay-flat
Which makes Hermès even more of an oddity when one looks at the decline in the overall luxury sector. The maker of the Birkin handbag continues to see strong demand and high margins even as industry peers flounder. Ditto the likes of uber luxury brands Loro Piana and Brunello Cuccinelli, who both continue to defy the wider industry slowdown by posting double digit growth figures. So, we clearly have a bifurcation happening with the brands defying the downturn by keeping the profit mill churning leaning heavily into their cultural heritage and market positioning while limiting supply (ie classic, time-tested luxury strategy), while those that are treading water seem to be getting battered from all sides by market dynamics. Maybe the only way forward is to go backwards
“Which makes Hermès even more of an oddity when one looks at the decline in the overall luxury sector.”
Interestingly, while China has been demeaned by several foreign luxury goods makers which have been pushed by the West, Hermes has catered to China. Possibly the Chinese do not care to be demeaned and asked to buy products from the demeanors. The Chinese really know how to make dresses, and look at how the fashion-forward have been dressing.
https://english.news.cn/20240309/431aad88c84a46cc9077ba2f84abcdf3/c.html
March 9, 2024
Traditional Chinese attire resurges as chic fashion
“How ‘Dupes’ ”
Google AI
“According to the Oxford Advanced American Dictionary, a dupe is a person who has been tricked or cheated. As a verb, dupe means to deceive or cheat someone.”
Forgive my lack of understanding, but I find no reason to think the Chinese government is deceiving or cheating the Chinese or other peoples in data, and the economic data that are being released for 2024 have been excellent. Also, Chinese economic policy has been designed to increase potential growth from 2025 and on.
As Robert Solow explained in terrific work, increasing potential growth means investment, lots of investment and China is investing at by far the highest rate of any development country. For instance, the UK which is worried about growth has been investing at less than 20% of GDP and a significant amount of this is property investment. China is investing above 40% of GDP, and has purposely limited property investment or speculation.
What I find is a country that has experienced splendid growth since 1977, growth that has meant China is by far the largest country in GDP and growing faster than the next large GDPs, growth that has meant ending severe poverty, growth that is making China as self-sufficient as necessary and able to assist the growth of partner less developed countries.
https://fred.stlouisfed.org/graph/?g=1tLEO
August 4, 2014
Real per capita Gross Domestic Product for China, United States, India, Japan and European Union, 1977-2023
(Indexed to 1977)
In this context “dupe” is short for “duplicate.” It’s a term that makeup and fashion customers use to describe cheaper products that mimic a more expensive product. So like a Revlon lipstick that is nearly an exact color match for a MAC lipstick for example. Or a knockoff bag that resembles an Hermes.
In this context “dupe” is short for “duplicate.”
[ Wonderful. Thank you so much for rescuing me from my foolishness. Like the fancy motorcycles I would watch on the streets of Hanoi, Vietnam, which I finally noticed were not Hondas but “Honkas.”
Here however is just my sort of “dupe”:
https://english.news.cn/20240331/556a57c7dfa447a5ac76542cfe98a3f6/c.html
March 31, 2024
Self-taught young designer rides booming revival of traditional attire Hanfu
HANGZHOU — Standing in front of a horse-face skirt showcased in a garment factory, Liu Wenyue, 24, meticulously elaborated on the inspiration she drew from when designing it.
“I drew inspiration from the shell carving process used to create mother-of-pearl lacquer, an intangible cultural heritage in China. I chose the chromatic silver thread and images from traditional Chinese paintings — birds, flowers, hills and rocks — as the motifs. I also added window-frame patterns on the edge to give the entire piece the appearance of lacquerware,” said Liu.
“It is the best-selling piece in our store, with 20,000 pieces sold so far,” said Liu, a young Hanfu designer who majored in pre-school education and switched to a new profession, riding the boom of popularity of traditional Chinese culture…
The Chinese may have discovered that the luxury bags they splurged on, believing they were made by Italian artisans, were made by their compatriots with scraps of money.
https://www.wsj.com/business/retail/christian-diors-57-handbags-have-a-hidden-cost-reputational-risk-8175c9c9
“…made by their compatriots with scraps of money.”
Yes, the Wall Street Journal has long been trying to rescue the Chinese from being paid with money scraps. Whatever will happen when the rest of the Chinese know?
https://english.news.cn/20241226/389397a74f6549029635bbfe2892c2eb/c.html
December 26, 2024
Xinjiang sets new tourism record with 300 mln visits this year
URUMQI — Northwest China’s Xinjiang Uygur Autonomous Region has seen a record 300 million visits this year, a 14 percent increase compared to last year, the regional culture and tourism department said on Thursday…
“The Chinese may have discovered…”
Yes, this is what the Chinese have discovered:
https://english.news.cn/20250122/2c34e7dcaf71436b835eccbb4d677960/c.html
January 22, 2025
Tanzanian children undergo successful heart surgeries with Chinese-pioneered new technology
By Hua Hongli and Lucas Liganga
DAR ES SALAAM — Tears of joy flowed freely as Husna Shabaan Kingwande learned that her three-year-old son Ikram’s heart surgery had been a success.
The procedure at the Chinese-built Jakaya Kikwete Cardiac Institute (JKCI) in Dar es Salaam, a major city on Tanzania’s Indian Ocean coast, marked a significant step in introducing advanced Chinese medical technology to Tanzania.
Ikram was one of five children, aged between three and seven, who underwent cardiovascular surgeries using the PAN-Procedure, a minimally invasive technique pioneered by Professor Pan Xiangbin of China’s Fuwai Hospital.
This revolutionary procedure, which relies on ultrasound imaging rather than traditional fluoroscopy, treats cardiovascular diseases through peripheral blood vessels without requiring open-heart surgery or radiation exposure…
Forgive me, but the Chinese economy is faring splendidly and this a critically important part of the reason why:
https://www.imf.org/en/Publications/WEO/weo-database/2024/October/weo-report?c=924,534,111,&s=NID_NGDP,&sy=2007&ey=2024&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1
October 15, 2024
Total Investment as a percent of GDP for China, India and United States, 2007-2024
2020
China ( 42.9)
India ( 28.9)
United States ( 21.4)
2021
China ( 43.3)
India ( 32.1)
United States ( 21.3)
2022
China ( 43.2)
India ( 33.0)
United States ( 22.0)
2023
China ( 41.6)
India ( 33.3)
United States ( 21.5)
2024
China ( 42.0)
India ( 33.7)
United States ( 21.8)
This sort of economic analysis, even from a Nobel Prize winner, strikes me as only saddening, but it is part of a Western drum beat:
https://www.project-syndicate.org/commentary/xi-jinping-china-economy-rotting-from-the-head-by-daron-acemoglu-2022-10
October 28, 2022
China’s Economy Is Rotting from the Head
By Daron Acemoglu
*Sigh*
The IMF does not do independent economic reporting. It is using data provided by China, which is not even remotely comparable to Western data and is widely known to exaggerate to exaggerate GDP growth.
Reported US real GDP is likewise widely known to exaggerate US GDP growth. Among other reasons, the GDP price deflator used by the Bureau of Economic Analysis is grossly understated, which causes reported real US GDP to be grossly overstated.
This is “whataboutism,” a variant of tu quoque, a rhetorical fallacy. You have effectively conceded the point re China.
Please read the Michael Pettis link I provided. He suggests the exaggeration in China is on the order of 50%. No one has ever suggested the US fudges come to anything like that level. The Bundesbank has said the US GDP, if calculated as the Germans do, would be about 0.5% lower per annum.
“The IMF does not do independent economic reporting. It is using data provided by China…”
I appreciate the reminding. Surely so, and I trust Chinese data and continually refer to it in class just as I refer to American and British data provided to the IMF.
Reflections of Chinese investment data are found everywhere in China. I continually refer to “high-value” Chinese research results published in leading international journals. I can see what it took to build the advanced transport system through Tibet, and I know the value of the lower education system in Tibet even though the New York Times finds it beyond awful. I can follow the UN prize winning water conservancy programs at a cost that was about $180 billion in 2024. I can read reports from Madagascar and Botswana of Chinese agriculture investment.
Possibly I am only foolish, but I trust Chinese data.
I just watched one of the talks at the WEF in Davos, yesterday on Chinese economy. It was interesting. I think if you don’t want to go through the whole 47 min you could listen to the last 10 or 15.
https://www.weforum.org/meetings/world-economic-forum-annual-meeting-2025/sessions/decoding-chinas-economy-present-and-future/
There doesn’t seem to be a sense of the economy being in a bad spot but it does seem like there is a sense of hesitation to invest and lower demand. They don’t exactly touch on the cause of lower demand, though.
“There doesn’t seem to be a sense of the economy being in a bad spot but it does seem like there is a sense of hesitation to invest and lower demand. They don’t exactly touch on the cause of lower demand, though.”
Importantly, the Chinese have been under sanctions these last 8 years. President Biden was putting on new sanctions up to the last week of the presidency. Also, foreign companies have been repeatedly subject to sanctions for investing in China. China has been struggling for the right to develop. Even medical equipment for and from China has now been sanctioned by America.
Americans rarely mention the China sanctions, but they are a severe development threat.
Fortunately, China is simply too strong economically.
“It is natural for luxury brands to use price as a barrier to entry for mass consumption and as a way of preserving its exclusivity.”
Of course that is only part of the story and it avoids, deliberately or otherwise, a prime determinant of both higher prices and the obligatory artificial scarcity that determines those same higher prices. That is, for example,
“Brands destroy product as a way to maintain exclusivity through scarcity, but the precise details of who is doing it and why are not commonly publicized. Every now and then, though, bits of information will trickle out. Last year, for example, a Danish TV station revealed that the fast-fashion retailer H&M had burned 60 tons of new and unsold clothes since 2013.”
https://www.vox.com/the-goods/2018/9/17/17852294/fashion-brands-burning-merchandise-burberry-nike-h-and-m
Noting also, that, “World Bank economists calculate that the wealthiest 10 percent of the world’s population uses close to 60 percent of all the world’s resources. If this richest 10 percent reduced their consumption to the average consumption of the rest of humanity, total global resource use would be cut in half.”
Finally, the frenetic irrationality of the current economic system (Where, “. . . consumerism is a belief system and culture that promotes consuming as the path to self- and social improvement. It’s a complete political and economic ideology, sponsored by sophisticated marketing techniques that generate significant profits while stripping the earth of resources. As a dominant cultural force, consumerism offers products to address every dissatisfaction while actually creating social conditions that undermine equity and environmental stability.”) was pointed out long ago,
“As early as the 1920s Stuart Chase identified four systematic sources of waste under capitalism: (1) the labor power used to produce “vicious or useless goods and services”; (2) labor power wasted due to unemployment; (3) the unplanned nature of production and distribution of goods leading to inefficiencies and overproduction; and (4) the senseless waste and overuse of natural resources.”
https://truthout.org/articles/capitalist-economies-create-waste-not-social-value/
I had read the Michael Pettis article carefully before, and now have read it through again. I also have read the articles referred to by Pettis. Sorry, but I find no reason to think the data China supplies on growth is inaccurate. Also, I consider advice to China on policy by Pettis and prominent followers such as Brad DeLong and Paul Krugman and “The Economist”… would have assured severe development difficulties for China.
Simply look to China’s development of a space program after President Obama cut China off from working with NASA, look to the cutting off of China from the GPS. Then, look at the brilliant space program that China constructed. Look at the development of the Chinese shipping industry, high speed rail system, electric vehicle industry, solar and wind industries, hydrogen. Look to agricultural growth. Look to the efforts to even growth regionally.
Look to the ending of severe poverty and continued work with families who were assisted to assure better well-being.
On and on, China has experienced wondrous growth since 1977. If the deep-rooted problem for a Milton Friedman-like Pettis and followers is China as socialist, no matter.
Maybe the Chinese tourists/consumers just don’t want or need to shop for western goods or travel to other countries. How are Tesla’s sales in China this past year? How are they looking for 2025? Competition is getting stiffer and why deal with Americans constantly sanctioning your country while actively trying to break supply chains. The Chinese may not build another apartment/house for 50 years, but aren’t inexpensive housing, food, education, and healthcare competitive advantages.
“Maybe the Chinese tourists/consumers just don’t want or need to shop for western goods…”
What a terrific comment, all through.
*Sigh*
You’ve just admitted to having a huge bias, which one can infer by looking at your comments on this topic over time.
China is an enormous country with a large, rural, and still poor hinterland whose migration to cities is restricted.
Impressive growth in some sectors does not necessarily mean enough to lift the entire country to the degree claimed in official statistics.
The space sector is tiny in total GDP terms, so its improvements don’t even begin to support your claims about growth.
I think the back-breaker is going to be the new ‘spheres of influence’ US recognition of multipolarity. Client states will be required to ‘de-risk’ from China, imposing tariffs to which China will retaliate. For some countries, such as Canada, the pain will be manageable since relations with China are already not great, but for Europe and Australia, it will be disastrous. Consumer costs will rise and jobs will decrease potentially leading to stagflation. In particular, Europe relies on selling a lot of luxury goods to China which will get hit. VDL seems to be ready and willing to go along with this harebrained plan.
Another data point about the lower reaches of the luxe industry: a finance bro who regularly buys fancy wine discovered that the market had generally seized up in the first half of 2024. There are vendors operate wine futures auctions, and wine storage. You can purchase a case of the good stuff while it’s still in the vat, and also purchase its storage for years or decades, and finally auction it off or take delivery.
https://www.blindsquirrelmacro.com/p/red-markets-in-red-wine
It’s a typical stock-bro newletter article, and I haven’t read the subscription-only part. But the free-to-read part goes over his analysis of the secondary auction sector of the fancy wine industry, and some other low-end luxe industries.
I first learned of the wine storage industry from a P. G. Wodehouse novel that has Bertie Wooster laying down a case of port for a newly born nephew, to be delivered and opened on his 25th birthday. Can’t name the novel, but I think it happens in the first few pages. It’s just a bit of detail to exposit that Bertie is rich as Croesus.