China’s Failed Rebalancing¶
When China’s leaders first acknowledged the need to rebalance the economy nearly two decades ago, it seemed like a matter of when, not if. But with the household consumption share of Chinese GDP remaining stubbornly low, officials’ promises to boost domestic demand have lost all credibility.
NEW HAVEN—China’s efforts to rebalance its economy have been an abject failure. Nearly two decades after former Premier Wen Jiabao bemoaned the Chinese economy’s excessive dependence on investment- and export-led growth, the problem has gone from bad to worse. The lack of meaningful consumer-led rebalancing implies increased reliance on these time-worn sources of economic activity, raising critical questions for China and the rest of the world.