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Luxury consumption

Updated: 2011-10-25 07:58

(China Daily)

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Several international organizations have made predictions about when China's luxury purchasing power will overtake that of Japan. Some suggest it could happen this year, some claim it will be next year, while others claim it will be 2015.

But not every case of our country's transcending a big economy is plausible.

When China surpassed Japan in terms of GDP in 2010 and grew into the world's second economic powerhouse, economists reminded us that this should not necessarily mean we're a leader. The country lags far behind others in terms of GDP per capita.

Even those who celebrate every sign of success may not rejoice at the country's growing appetite for purchasing luxury goods. The country overtook the United States as the world's second largest luxury goods consumer last year.

The reason for the spending spree is simple: China's booming economy is rapidly creating an affluent middle class population. These consumers are educated, have well-paying city jobs and have a handsome disposable income.

Chinese consumers are now buying luxury goods so aggressively that they are pushing up prices, and luxury retailers are scrambling to open new stores here.

But while the growth of the luxury goods market in China is a result of consumers' desire to show off their wealth and status, for some this desire exposes a darker side.

For some high-ranking civil servants their income cannot account for their spending on luxury goods.

Zhou Jiugeng, former head of the housing administration department of Jiangning district of Nanjing in East China's Jiangsu province, wore a Vacheron Constantin worth 100,000 yuan (US$15,652) and drove a Cadillac. Local prosecutors found that Zhou accepted bribes of more than 1.07 million yuan from 2003 through 2008.

People had every reason to doubt Zhou's conduct because honest civil servants in this country can't afford such extravagant items. Luxury spending is more than just a sign of wealth; it can also be a symptom of social viruses and hint at the dirty secrets corrupt officials hide.

With this in mind, that China can lead the world in luxury spending is not a cause for rejoicing and does not reflect the might of the country.

(China Daily 10/25/2011 page9)

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