Something once unthinkable may be going on in both China and Japan -- people are losing interest in consumption. This produces deflation which economists fear, but may reflect a deeper change could be going on where a billion and a half prosperous people are beginning to seriously question consumer capitalism. PNS editor Franz Schurmann is emeritus professor of history and sociology at UC Berkeley. He speaks and reads both Chinese and Japanese and has written extensively on both countries.

There's a lot of talk in the United States about the "China threat." We are warned that within a few years "stolen" weapons secrets will allow China to produce enough missiles to wipe us off the face of the earth. But there's hardly any talk about a much greater threat -- the possibility that 1.3 billion Chinese are losing interest in consumption.

China is now the world's second largest economy, according to the latest International Monetary Fund calculations, followed by Japan. The Japanese have been losing interest in consumption since their "bubble" burst in 1992 -- hence the seven year running recession they are having difficulty getting out of.

If recession hits China as well, both giant economies will in effect move out of the global economy. That would mark the end of the global economy, and without it the United States could finally experience that "great crash" predicted so many times these last years. No wonder President Clinton is so anxious to get China into the World Trade Organization (WTO).

Consider the following new facts of economic life about China recently highlighted by the Chinese-language pro-Taiwan World Journal:

• Worsening under-consumption is choking the economy

• Consumer goods prices have been falling for the last three years

• Factory and business inventories are soaring.

This is not because people have no money -- just the opposite. People are putting their plentiful cash into savings or buying speculative stocks. As a result total personal savings recently reached $768 billion, a new high. And banks have far more cash savers than loan takers -- recently, a quarter of $1.2 billion in low-interest production loans from the government was not taken.

When Chinese prime minister Zhu Rongji spent a week in the U.S. last April he kept saying that the worst problem he faced at home is deflation. He couldn't convince the Chinese -- nor American reporters -- why deflation is so dangerous. Japanese prime ministers also have that problem.

These two huge economies have built their prosperity on massive exports and huge internal markets. But their people are getting tired of the endless gimmicks consumer capitalism keeps throwing on the market. So instead of buying they are saving.

In both countries the currency is hard. The yen is the number two global currency after the dollar. And China's RMB -- or yuan as it's also called -- did not waver in the face of the speculative blows which struck Asian financial markets two years ago. It's exchange rate with both dollar and yen hardly changed.

What are people saving for? In both countries birth rates are way down. In China it's obligatory to have only one child. In Japan it's become the accepted norm. Both countries already have inverted demographic pyramids with growing numbers of aged people and fewer young. Why work that hard for just one heir?

Much if not most of this new economic behavior can be traced to greater longevity. The Japanese are the most long-lived people in the world, and mean life expectancy in China is now in the low seventies.

As they come to count on longer life spans, both Chinese and Japanese are taking greater interest in their personal lives. They think in quality-of-life terms and favor environmentalism. They want more freedoms -- but always with a stability brought by sound currencies. In both countries traditional religions are returning and most -- whether it's Buddhism, Taoism, Shintoism, Confucianism, Islam, Christianity or one of the newer sects - preach a good but simple life.

The World Journal editorialist chides the Chinese Communists for talking too much about spirit and not enough about building trust. With trust, people will again consume and production will rise.

But it's also possible a much deeper change is going on where a billion and a half prosperous people are beginning to seriously question the consumer capitalism which America has been preaching all over the world.