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Our greatest export, the Joneses

Weekend reading

Having re-embraced capitalism like only a 2,000-year old culture could do, the Chinese are also getting our traditional diseases of affluence.

No, not chronic obesity (yet) but the other kind of conspicuous consumption, and all its attendant evils.

That rich Chinese consumers like a bit of flash won’t come as a shock to anyone who has been following the earnings of companies with luxury brands.

While doomsters wonder how we’ll ever sell anything to China, firms like BMW, Tiffany and Burberry have been queuing up to load containers returning to Shanghai with our high end tat fanciest goods.

‘Keeping up with the Wangs’ researchers (genuinely!) call it.

Apparently the knock-on effects of judging yourself by your stuff versus your neighbours’ – as opposed to your devotion to the Glorious Chairman – is even affecting Chinese stock portfolios, the Wall Street Journal reports:

Compared to investors in the poorer provinces of China, those in the wealthiest provinces put more of their portfolios in stocks headquartered nearby (presumably because they aren’t tainted by proximity to the rural areas).

Wealthier Chinese investors also trade more in smaller stocks (perhaps because that makes them feel they are “in the know” relative to people who aren’t familiar with these names).

All this demand appears to have driven smaller stocks to steep prices, although high valuations haven’t discouraged wealthier Chinese from continuing to invest.

Quite the contrary: That seems to brand these stocks as a kind of luxury good, making them still more desirable.

Curious as these findings are, they won’t be wildly relevant to many of us (except perhaps Anthony Bolton, as he tries to pep up his flagging China trust). The Chinese stock market remains pretty tiny in the grand scheme of things.

No, this was the bit that struck me:

People in China’s richest provinces already report lower levels of happiness than those in the poorer areas. Extravagant housing prices, traffic jams, pollution and the pressure of constant social comparisons will do that to you.

Despite the sad universality of affluence and envy, I think China is probably a couple of decades away of being rich enough to afford to protest about it.

Then again, given China’s cavalier attitude to pinching our best ideas, perhaps Chinese anti-capitalism will soon go ironic full circle in Tiananmen Square?

{ 1 comment… add one }
  • 1 Faustus December 17, 2011, 2:34 pm

    The Telegraph article on rent v. mortgage costs is full of typical estate agent tosh. Such lazy and misleading thinking promoted in rags like the Mail/Telegraph helped to generate the house price bubble in the first place. It is true that rents in London are extortionate, but it is utterly bogus to say ‘there has never been a better time to buy’.

    First, the calculations are based on interest-only repayments, the kind of mortgage that is increasingly scarce, and is useless for comparing ‘affordability’ since most mortgagees will have to repay capital too. Second, the figures exclude depreciation (maintenance costs) and insurance which are the owner’s responsibility. Third, the figures exclude the opportunity costs of sinking a deposit into a house rather than investing it, and assume therefore ever continuing house price rises. Wishful thinking if ever there was some!

    Readers of this reckless piece would do well to compare with another story in this week’s press:


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