Hey, Big Spenders!

If you're a CEO and you don't know Chen Xiangjian, you may be headed for early retirement. The soft-spoken, bespectacled 32-year-old from the Chinese city of Chongqing doesn't seem to realize the power he has, describing himself as "quite common." But Chen is one of the most sought-after people in the world, a man who can decide the fate of corporations, move stock markets and reshape the global economy.

One look inside his two-bedroom apartment shows just how he's doing this: with his wallet. Upwardly mobile and increasingly free-spending, Chen is the prototypical Chinese consumer, and he—along with hundreds of millions of others like him—are on a shopping spree that would once have seemed unimaginable. A Toshiba TV forms the centerpiece of his living room. Chen owns an LG DVD player, films his 1-year-old daughter Youyou on a Sony digital video recorder, chats on a Samsung camera phone, and surfs the Internet on a Sony laptop computer. Chen, who earns an annual salary of $4,800 working at a state-owned engineering firm, bought the apartment in 2002; last year, he took out a mortgage and invested $60,000 in a second, much larger four-bedroom pad, which he rents out for $300 a month. As part of his "10-year plan," he also wants to buy a car (he has his eye on a Ford), attend the 2008 Olympics in Beijing, and take his first vacations outside of China, to Washington, D.C. and the Maldives. But Chen holds even higher hopes for his daughter. "By the time she's my age," he predicts, "her life will be as good as the best in America."

Chen's isn't an impossible wish. Mainland China's economy is expanding so quickly that every year more and more Chinese can afford their own versions of the American Dream. They are already among the world's most influential shoppers. Each year, Chinese buy more TVs and mobile phones than Americans do; and Chinese consumption has helped push up global prices for oil and steel. But that's nothing compared with the binge still to come. Last year, Chinese consumers spent only 9% of what U.S. consumers spent—but they're rapidly catching up. Investment bank Credit Suisse First Boston (CSFB) forecasts that spending by Chinese will quintuple in the next 10 years to $3.7 trillion. China will be among the world's three fastest-growing markets over the next decade, says CSFB, in everything from PCs to cars to airplane tickets.

For many of the world's biggest companies, winning in China is becoming the difference between growth and stagnation, success and failure. Investment bank UBS estimates that at least 75% of the $260 billion of foreign direct investment that has poured into China over the past five years has been invested in businesses serving the mainland domestic market. Nokia predicts that a quarter of all new mobile-phone subscribers over the next five years will be Chinese, and by then, China will likely have overtaken the U.S. as the Finnish firm's biggest market. Martin Coles, president of international operations for Starbucks, says the coffee-shop chain has only 127 outlets in China out of its global total of 9,261—but notes that "long-term we see China as potentially our second largest market after the U.S." Nearly 30% of all new McDonald's opened this year will be in China. And General Motors expects China to overtake Japan as the world's second biggest car market next year. But the potential remains boundless. For example, only 8 out of every 1,000 driving-age Chinese currently own a car, compared with 940 per 1,000 in the U.S. "China is probably the most important market for the global industry," says Phil Murtaugh, who ran GM's China business for nine years before resigning in March. "If you don't take advantage, it's going to have a major impact on your corporate profile."

According to CSFB, Chinese consumption is likely to expand by 18% a year over the next decade, whereas the U.S. will see only 2% annual growth. Within 10 years, CSFB predicts, "Chinese consumers will likely have displaced U.S. consumers as the primary engine of global economic growth." That may sound ominous to China's economic rivals, but it isn't. In fact, this historic shift may prove to be the salvation of the global economy. With increasing urgency, economists have been warning that world trade is overly dependent upon U.S. consumer spending, which has accounted for 25% of world GDP growth since 1998. Debt-ridden Americans will eventually be forced to cut back—and when they put away their credit cards, economic growth globally will suffer, especially in U.S.-export-driven Asian economies. With U.S. trade and budget deficits at record levels, the high likelihood of a major adjustment in American consumption means that "Asia could be in serious trouble," says Stephen Roach, chief economist at Morgan Stanley.

Asia's consumers can help redress this imbalance by spending more—and China, the world's most populous country, can set the pace. Chinese consumers aren't nearly as rich as Americans yet, but they do have surplus cash. Urban households save about 23% of their earnings, compared with a near-zero savings rate in America. The U.S. has more millionaires than China does—2.27 million for the former compared with 236,000 for the latter—but the ranks in China are growing fast. CSFB estimates that mainland urban incomes doubled in the past nine years, and will likely rise another 46% over the next decade. By 2013, the bank predicts that 151 million urban families will earn more than $10,000 a year, up from only 3.8 million in 2003. "There is good potential for China to step into the breach and be a positive force for the world economy" by continuing to boost its consumption, says David Dollar, country director for the World Bank in Beijing.

Equally important, China's newfound wealth is seeping deeper and deeper into its vast hinterland. During much of China's economic boom, the modern shopping malls, flashy apartments and party-hearty lifestyles symbolic of New China were restricted mainly to pockets of nouveaux riches in a few major metropolises—Beijing, Shanghai and Guangzhou—and some special industrial zones along the coast, like Shenzhen. Cities like Chongqing in western China trailed far behind. But now the good times are coming to every corner of the country. In Chongqing, a city of 31 million people some 1,400 kilometers from the glitz of Shanghai, the main downtown shopping plaza boasts luxury outlets like Hugo Boss, Montblanc, Max Mara and Burberry. Couples munch French fries at KFC and McDonald's. French retailer Carrefour opened its third hypermarket in Chongqing in April, and Wal-Mart will open its first in July. "We can't even recognize this city," says Chen, the Chongqing engineering-firm employee. "You can feel how things are changing."

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