Chinese shift to consumption

Ever since the global financial crisis hit China's exports in 2008, the country has tried to change its economic strategy, shifting dependence from foreign demand to domestic consumers. The economic shift is also on top of the agenda of the policy making meeting in Beijing now. So how has the shift been going so far?

China has geared its economy toward consumption rather than export. The formula is aimed at shielding the economy from global downturn. But to persuade thrifty Chinese to loosen their wallets will require a massive cultural shift. Are people willing to spend now?

Wang Xiaodong, Beijing resident, said, "To save and not to spend is part of Chinese older traditions."

Ms. Zhang, Beijing resident, said, "Now people's ideas are no longer traditional. They tend to spend more than save."

Guo Xiaochun, Beijing resident, said, "Only my parents' generation would save. Most of my friends just spend all they earn."

Mr.Yang, Beijing resident, said, "Those who do not spend have their concerns. Young people nowadays like to spend."

It looks the cultural shift is under way as the younger generation is very willing to shop till they drop. But, Jing Ulrich of J.P. Morgan says it's still early days.

Ulrich says several conditions must be in place before the cultural shift becomes the economic shift. A social safety net is vital to ease consumers' concerns.

Chinese premier Wen Jiabao says confidence is more precious than gold. Now the government is trying to improve the social safety net. Only when the network is established, will people have the confidence to spend. And that's exactly what the policy makers are talking about right now in Beijing.