TIANJIN, China — Few temples to conspicuous consumption are as quirky as the Florentia Village, a sprawling “authentic Italian luxury outlet center” on the outskirts of China’s northern city of Tianjin that boasts its own ersatz Colosseum.
Even on a weekday afternoon, hundreds of shoppers stroll the Italianate lanes of the 15-acre outdoor complex with their rows of discount-brand outlets selling everything from Prada bags to Puma shoes.
The “village” is just one of a host of new shopping opportunities that have sprung up across China in recent years, testament to the fast-growing power of the nation’s consumers.
Yet with China’s economy slowing — to a relatively modest annual rate of 8.1 percent growth in the first quarter — some observers fret that consumption could be faltering. Retail spending in April was weaker than expected. And while Wen Jiabao, the premier, last week signaled action to shore up growth, the government appears to have set its policy focus on promoting investment rather than consumption.
Not everyone is worried. Analysts at Jefferies, a global securities and investment banking groups, say state data show that China’s retail sector is set to rebound, creating buying opportunities for stock investors. “Our recent channel checks with retailers and retail associations also suggest that retail sales are seeing a gradual recovery,” they said in a report released Thursday.
Staff at outlets in Florentia Village, too, insist business is good at the complex, which opened in January 2011.
On Friday, Wang Yongqiang and Tang Ying, a young couple, were delighted to snap up his-and-hers Levi’s at what Tang described as a good discount on prices in central Tianjin. “We do quite a lot of shopping,” she said.
With household incomes still rising, consumption growth is unlikely to fall dramatically, according to Andrew Batson, research director at GK Dragonomics.
Indeed, Batson suggests that the present slowdown could promote a much-heralded rebalancing of China’s economy, away from reliance on increasingly unproductive investment to a healthier consumption-driven model.
While the government has long talked of such a shift, the proportion of gross domestic product accounted for by investment actually soared to 46 percent in 2010, while household consumption’s share of GDP slumped to just 35 percent.
This is not because people are failing to spend more — at nearly 8 percent, Chinese household consumption growth far outstripped the average across developing Asia last decade — but simply because it could not keep pace with GDP.
Now, said Batson, “rebalancing can come from steady consumption growth and declining investment.”
Some economists say the government needs to do more to promote this rebalancing in a country where citizens still save a far larger proportion of their incomes than do their counterparts in developed economies.
Even the enthusiastic shopper Tang and her husband squirrel away more than half of their joint income of about $1,576 dollars a month, they say, for a home of their own, a nicer car and a hoped-for baby. “Chinese love to save money,” Wang said.
Lower-income consumers also save fiercely. In the village of Wuti in northern Hebei province, house builder Li Moxiang and his farmer wife aim to set aside $3,150 or more a year to help raise their future grandchild — even though stingy state-set interest rates mean such savings are constantly eroded by inflation.
“We don’t buy much in the way of clothing and other things because we want to put money aside,” Li said.
A big motivation for such saving is the lack of a social security system to cushion Chinese in old age or ill health. Serious illness or accident often spells household bankruptcy. For most rural people, children have to play the role of pension provider.
In a report this week, the World Bank said fiscal measures to support consumption — including targeted tax cuts, social welfare spending and other social expenditures — should be Beijing’s top priority as it seeks to avert an economic “hard landing.”
Some economists would like to see mass privatization to shift wealth out of the dominant and domineering state sector.
Many Chinese would certainly like the chance to share a little more in the nation’s ever-more conspicuously displayed wealth.
In the gritty Hebei town of Langfang, migrant worker Duan Tingchun, 34, spends his days cleaning the glass facade of the towering Wanda Plaza, home to an IMAX cinema and shops including France’s Carrefour and Uniqlo of Japan.
Duan makes $25 a day when he works — he is not paid if rain prevents cleaning — and on Friday was preparing for a grueling bus ride south to the family farm to help bring in a harvest. He would like to spend more, he says, but has no illusions about his own limited ability to boost Chinese consumption.
“If you don’t have much money, you can’t consume much,” he said.