1/6 Good Bloomberg article on why China needs to raise the...
Michael Pettis@michaelxpettis
55 views
Mar 06, 2025
~1 min read
Advertisement
1
1/6
Good Bloomberg article on why China needs to raise the consumption share of GDP and how Beijing has become increasingly aware of the need to do just that.
But for all the rising awareness, it will not be any easier than it has in the past.
bloomberg.com/news/features/…
Good Bloomberg article on why China needs to raise the consumption share of GDP and how Beijing has become increasingly aware of the need to do just that.
But for all the rising awareness, it will not be any easier than it has in the past.
bloomberg.com/news/features/…
2
2/6
We might get a 2-3 percentage point rise in the consumption share of GDP if there is a revival of household confidence, and Beijing is certainly betting on reviving household confidence, but I'd argue that any such revival...
We might get a 2-3 percentage point rise in the consumption share of GDP if there is a revival of household confidence, and Beijing is certainly betting on reviving household confidence, but I'd argue that any such revival...
3
3/6
is more likely to be a consequence of rebalancing than a cause, and even if China raises the consumption share of GDP by 10 percentage points, it will still be among the lowest consuming economies in the world.
is more likely to be a consequence of rebalancing than a cause, and even if China raises the consumption share of GDP by 10 percentage points, it will still be among the lowest consuming economies in the world.
4
4/6
A bigger and more sustained increase will be extremely hard to pull off. The article cites Neil Thomas, who points out that this would require a major transfer of resources from either the government or from businesses.
That's the problem.
A bigger and more sustained increase will be extremely hard to pull off. The article cites Neil Thomas, who points out that this would require a major transfer of resources from either the government or from businesses.
That's the problem.
5
5/6
Transfers from the former require significant political changes, and transfers from the latter require reversing the whole productionist orientation of China's economic model, including undermining its global manufacturing competitiveness.
Transfers from the former require significant political changes, and transfers from the latter require reversing the whole productionist orientation of China's economic model, including undermining its global manufacturing competitiveness.
6
6/6
The point is that China's extraordinarily low consumption level is not an accident. It is fundamental to the country's economic growth model, around which 3-4 decades of political, financial, legal and business institutions in China have evolved. Changing this won't be easy.
The point is that China's extraordinarily low consumption level is not an accident. It is fundamental to the country's economic growth model, around which 3-4 decades of political, financial, legal and business institutions in China have evolved. Changing this won't be easy.
