COP21 ignores current economic growth model at its own peril.
Alibaba’s $14.3 billion “Singles Day” sales frenzy earlier this month was a triumph for consumption. Chinese lonelyhearts compensated for their empty dance cards by settling in front of their computers, going online to the e-commerce site and buying as much — in one day — as Ugandans buy in a year. Or, if that’s not striking enough, Chinese bought more in a day than the consumers of the 30 smallest countries in the world — combined — buy annually. Take that Vanuatu!
Markets were giddy to see Chinese spending 60% more on Singles Day than they did last year. Why? After decades of being the world’s factory of inexpensive consumer goods and enabling the West to keep buying more stuff, the world is now counting on China to become the next demand engine for global consumer spending, and therefore growth.
And it’s happening. China is already the world’s second-largest consumer market, largely on the back of China’s so-called “affluent class”. The affluent class is expected to be 280 million people, or 20% of China’s population, by 2020. And the spending of the affluent will grow fivefold to $3.1 trillion, which is the equivalent to approximately 35% of China’s total consumption and more than 5% of global consumption.
And that’s just with one-fifth of China achieving affluence. What happens when that number goes up to one-half? Or one whole? And what happens when India takes its turn as the star of the consumption passion play? And then Africa?
We are facing a consumption tsunami that has huge implications on our ability to address climate change. Heading into COP21, there’s lots of talk about creating a “circular economy” powered by clean energy that produces de-materialized consumer goods. But in China, as Alibaba founder Jack Ma said on Singles Day, they are only at the stage of trying to move from quantity to quality in their consumer products. More sophisticated approaches like cradle-to-cradle thinking are not even close to being broadly practical in such countries where most people haven’t yet had a chance to consume much compared to the West. It would seem therefore that the circular economy is trying to fit itself into a square hole in emerging markets such as China.
With China’s economic growth slowing because of weaker exports and reduced investment in infrastructure, the country’s new leadership has made it unequivocally clear that the solution for sustaining growth will be priming domestic consumption. For a country that is already suffering from toxic waterways, coal-choked air and a public health crisis, pursuing monetary affluence and its side-kick consumption is a deal with a devil we know too well in the United States and Europe. More consumption. More resource inputs. More ecosystem demise.
As world leaders gather in Paris for COP21 to address climate, they do so seemingly blind to the fact that their story of economic growth remains the same — growth on the back of increased consumption. It is perhaps the ultimate form of climate change denial. And yet the world’s people are bought in: Global middle-class spending is expected to more than double from $21 trillion today to $51 trillion in 2030.
Here’s where most articles will offer a prescription for solving the problem. But I’m not sure there is one.
Most people in the world still live in poverty. And we’re still producing more people (1.5 billion more in the next 15 years). They want to live better lives. And they should be able to. But let’s be honest about what that means. It means buying appliances, and eating more meat, it means using more energy. It means more consumption. That’s not a recipe for a solution. Yet, as we prove again today in the mad spree of Black Friday shopping, it is a big part of Human Nature, which in the battle with Mother Nature, often wins the day.
Whatever climate deal is reached in Paris, it won’t address the root of the problem — Us.
It will tinker with how we do things, but it won’t change who we are and what we’ve constructed: Consumers in a global economy built on creating more consumption.
COP21 — can you solve that? Because we need to.