ajfortin.com

The year of the pig is in full swing. Almost wildly so. Do China’s consumers have a lot to celebrate about? Well maybe not about present circumstances, but certainly about the promise of the future. At least that is the considered opinion of a McKinsey&Company November 2006 report on the rise of China’s urban consumers.

Although consumption as a share of GDP has grown at a slower pace than economic output, “China’s economy is on the verge of an important transition in which its consumers will begin to take their place on the world stage.” The authors through their data argue that between 2006 and 2015, a “massive middle class” will emerge, and by 2025 China will become the ”third-largest consumer market in the world.”

They believe that the economic and demographic forces pushing this transformation are already well established. So it is really just a matter of “when” and not “if”.

The theory for this re-balancing of China’s economy towards consumption rests on two major assumptions: a decrease over time in the returns on financial investments, and an increase in the impact of domestic consumer spending on China’s economic growth.

On the flip side of the coin, the first assumption runs against a recent policy change in China’s investment policy – i.e. to become more aggressive — while the latter is being critiqued as a myth created by the “exuberant projections of investment banks.”

Myth or just good old predictive modeling, reality will eventually tell the story.

I was interested, however, in the report’s comments on health care. In 2005, Chinese households saved 37 percent of their disposable income. The primary reason for this high savings rate was the “weakness of the social safety net” such as unexpected health care costs. Almost as an aside, the report sounded a pessimistic note in that they assume the Chinese government will make only “modest progress” in this area. But as Chinese discretionary spending increases the “fastest growing product category will be private health care.” The report concludes “critical decisions will need to be made about government investment in the social safety net to free up consumption.”

And herein lies my discomfort, not with the report itself, but with subtext that informs it. Health care is framed here as a means to consumption and, in turn, a commodity to be consumed. In thinking this way, so much of what defines meaning in health care is simply lost.

More, important, one can ask of this view a very fundamental question: is the only obligation of China’s new private sector to offer health “products” to those who can pay? Is that all there is? What “critical decisions” must the private sector make to ensure better health care access, affordability and quality (as well as justice and equality)? How does this new private sector serve this essential public purpose?

These are questions not just for China but also for the west this as well. In the U.S. we still have a significant uninsured problem. The commodification of health care here doesn’t seem to have helped us very much with that challenge.