The Right Strategy for Rebalancing the Chinese Economy

Chinese household consumption is very low as a share of GDP. But if you look at it as a Share of Household Income, it's not that low. The only way to raise the household income share was to eliminate all of these huge transfers from the household sector to subsidize this rapid investment-driven growth. And without abandoning the growth model, you couldn't raise the household consumption share. Beijing policymakers are aware they need to reverse the growth model but also have reluctance because by definition Growth rates will slow down sharply.