Which Chinese Group Is Wantonly Buying Famous Brands?

The Source of Chinese Tourists' Shopping Trends

In recent years, Chinese tourists' lavish spending overseas has shocked and puzzled the international community. Where on earth is all the money they are spending coming from? Are Chinese people really becoming so wealthy now? Actually many overseas buyers of famous brands are Chinese youth. These young people drive luxury cars, wear famous brand clothes, and as a result, bewilder foreigners. 

Professor Feng Xingyuan, deputy director at the Beijing-based Unirule Institute of Economics has evaluated this phenomenon. The vast majority of those who spend lavishly are China's corrupt officials' children and the 2nd generation rich, he said.

According to Feng Xingyuan, "China's hefty state-owned banks and state-owned enterprises (SOE's) actually control the nation's economy. Since many of them are run by officials, rather than by entrepreneurs, this breeds a lot of corruption. Many children of officials, of presidents of SOE's and of state-owned banks' leaders are living in the West. A massive amount of capital has flown from China through these channels."

Gong Shengli, chief researcher with Beijing-based China Realities Insight magazine, provides his analysis. There are 200 million people in China with an average consumption of US$1.00 per day. There is no way to buy famous brands with a laborer's income in today's China.

Gong Shengli posits, "China's gray economy covers three major aspects. One is the bribery of government officials, another is business owners' ill-gotten gains, and the last one is using legal loopholes. An example of the latter is how the rule of law in China gets reinterpreted to serve their individual interests.”

Wang Xiaolu, deputy director of National Economic Research Institute, China Reform Foundation told the New York Times that this money stems from China's gray economy. Wang pointed out that China's gray economy has existed for many years on a huge scale. Yet after the Communist regime launched the economic stimulus plan in 2008 to cope with the global economic crisis, the underground economy has demonstrated even faster growth.

Feng Xingyuan said that the 4 trillion yuan economic stimulus plan had encouraged CCP local authorities to set up vast companies. The doing of which expanded local debts, and also created another chance for local officials to build their own manifestations of a gray economy.

Ma Jiantang, Chief of the National Bureau of Statistics, said it is hard to get the high-income group's real income information. Thus, up to today, the CCP authorities have not released the Gini Coefficient of China's urban residents.

Gong Shengli says, "Over the past 62 years, none of these officials can make their income public. The statistics are wrong, the tax revenues are wrong, plus there is an unfair income distribution. Since the officials are so afraid to make their income public, then why should civilians make theirs public?"

Gong Shengli points out that problem with China's laws and policies have led to man-made social issues such as inequitable distributions, income inequality and resource monopolies. Such policies can turn a person into a millionaire overnight.