Economists often reject “Confucian” explanations for high savings rates and low consumer spending in China on the grounds that economic behavior is mainly shaped by government policies. But government policies promoting savings are effective as long-term policies partly because they cohere with cultural predispositions.
Conversely, policies designed to promote spending are more likely to be successful if they cohere with those predispositions. For the Chinese, the key cultural value is the tendency to think of economic behavior not just as a matter of individual interests but as behavior shaped by concern for family members, including elderly parents. In fact, one Chinese economist, Sheng Hong, has studied the economic effects of values like filial piety.
In response to the financial crisis, the Chinese government has spent hundreds of billions on infrastructure projects, such as improving the rail network. Though these projects don’t empower consumers directly, they may improve consumption in the long term.
For example, the big spending bonanza in the Chinese calendar is the Spring Festival, the start of the lunar New Year. But many Chinese put off traveling home for the holiday because of overcrowded transportation systems. Improving the rail system will help increase travel and tourism, and boost consumer spending.
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