By Liu Zhiqin Source: Global Times Published: 2017-10-12
According to published statistics, China`s consumption during the National Day and Mid-Autumn Festival holidays this year from October 1-8 reached 580 billion yuan ($88 billion), surpassing expectations, with 710 million trips.
These numbers are sufficient to stun Western economists and evoke envy in other countries, which can`t equal such consumption. Many are asking: where do this energy, motivation and potential come from?
It is not difficult to find the answer. The achievements come from the Chinese development strategy of reform and opening-up and inclusive growth, which guarantees stable and fast economic development. Recently, many international institutions including the IMF and World Bank have raised China`s GDP growth forecasts. Learning from China has become a hot industry and will boost economic reform, opening-up and modernization in other countries.
Analysis of China`s "holiday economy" poses a challenge to economists: how to use economic theories to explain it; how to formulate scientific, practical and effective policies as a result; how to guarantee that this Chinese-style economic model can promote growth and transition.
Coincidentally, this year the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (the 2017 Nobel Prize in Economics) was awarded to American professor Richard H. Thaler "for his contributions to behavioral economics."
Behavioral economics has not yet drawn wide attention in the field. But because of the Nobel Prize, behavioral economics has rewarded two of the scholars behind it. Behavioral economics is a way to find answers or explanations that are missing from traditional theories.
China`s performance is evidence of rationality and the market effect of the "holiday economy," as well as an example or model of economic development.
If we analyze China`s "holiday economy" under the framework of behavioral economics, we can see that China`s long national holidays and tourism activities fully embody the psychology of the Chinese people. Their consumption, destination choices and accommodation arrangements all reflect their thinking and needs. It has resulted in an almost crazy style of travel. Everyone knows the highways will be jammed and the tourist attractions will be crowded, but people never lose their enthusiasm for doing it.
Being highly adaptable is the most common characteristic of China`s behavioral economics, which is enabled by the flexibility of China`s administrative structure and the resilience of the financial infrastructure. These are precisely what Western developed countries desperately need nowadays.
"Unusual behavior" in some Western countries, for example the US, shows that its economic development is encountering a real challenge.
This is a true example of behavioral economics and truly explains what the "holiday economy" means. Analyzing the behavioral economics of the consumption patterns of young people can direct development and allow for more precise supply-side structural reform.
The behavior associated with China`s "holiday economy" shows the traits of randomness and impulsiveness. Understanding these aspects is very significant to the promotion of China`s behavioral economy.
Similarly, the success of shared bicycles, Alipay and WeChat payments are all vivid demonstrations of behavioral economics in China. Studying the behavioral economics of the Chinese market and exploring the psychology of Chinese consumers will help the nation to develop more targeted and effective policies to encourage innovative manufacturing.
The author is a senior fellow of the Chongyang Institute for Financial studies at the Renmin University of China.