The new-found urge to spend and Golden Week crowds raise questions over the government's strategy for getting people out of their homes WHEN MAO ZEDONG stood on the podium overlooking Tiananmen Square in Beijing in 1949, he remarked: 'I do not see any factory chimneys, but I want to see them.' That comment set the tone for spending habits of Chinese for the next 40 years - production was good and consumption was bad. It proved a successful formula to turn a poor agricultural nation into an industrial powerhouse - the state used the billions of yuan its citizens deposited in the bank to build steel mills, coal mines, power stations and railway lines. But now the state is trying to persuade its people to kick the habit of high savings and thrifty living and to spend - new outfits, new household appliances, a new car, gifts for the wife and holidays. What the economy needs now is not more aluminium smelters and copper refineries but trips to the seaside and expensive weekends at mountain resorts. On this subject, for a change, Washington and Beijing are singing the same tune. During the G-20 meeting near Beijing in October, United States Secretary of the Treasury John Snow advised his hosts to open their wallets and sign up for more credit cards - and he was delighted to find them in agreement. It was in 1999 that scholars in Beijing came up with the notion of 'holiday economics', giving people longer breaks so that they would leave home with their families and spend money on travel, hotels, restaurants and entertainment. At that time, it was a novel idea, almost a contradiction. Chinese have long taken pride in their frugal habits, with the world's highest savings rate of more than 40 per cent, especially compared with those profligate Americans, the world's biggest spenders. Their view was that a credit card was a sign of shame, since it showed that you were in debt, while an American enjoys opening his wallet and flashing his stack of cards, a testament to his wealth and spending power. So, the government launched the Golden Week holidays, extending the October 1 National Day holiday from two days to seven and repeating the formula at Spring Festival and May Day. To encourage people not to stay at home, the media broadcast images of happy families on the beach, at mountain resorts and tourist sites and of trains leaving and arriving with the punctuality of a Swiss watch. A story began to circulate. An American and a Chinese woman meet in heaven and reminisce on their past lives. The Chinese says how proud she is that she has never been in debt. 'I saved carefully my whole life and, just before I died, I saved enough to buy a house.' The American says that, when she married, she bought a house with an enormous mortgage. 'Just before I died, I paid it off.' The message was: enjoy pleasure today with the money of tomorrow. After the first Golden Week, the media published figures of the venture's success. During the National Day break of 1999, 28 million people travelled for a holiday, spending 14.1 billion yuan. Since then, the numbers have continued to increase. During the May Day week this year, it was 121 million tourists and spending of 46.7 billion yuan. But, five years on, government officials, scholars and the public are questioning the wisdom of 'holiday economics'. A recent survey of Beijing residents found that 78 per cent planned to stay at home during the National Day holiday. They said tourist sites had too many people and buses and trains were too crowded. There was also the fear of theft and reserved hotel rooms being occupied. Now the debate has moved on. Economists are arguing that the country's transport system and hotels cannot absorb any further increase in traffic during the holiday weeks and a more sensible policy would be to encourage people to take their holidays at different times. Another factor is that the flood of visitors at one time to a beauty spot harms the environment. The urban middle class of 20- to 35-year-olds differ from their parents in being more comfortable with credit cards and debt and seeing the US lifestyle as something to emulate more than reject. A survey published recently at a conference on overseas tourism by Chinese found them to be the world's biggest spenders with average monthly spending of US$235 million. It found that, in the year to September, Chinese spent US$60 million in Germany and US$53 million in France, much of it driven by the need for 'face'. For some travellers, the poorer you are, the more you need to spend, to conceal your poverty. With people thinking like that, who needs holiday economics after all?