There is a line of thinking among foreign economists and financial analysts that China is in the midst of a change in direction known generically as “rebalancing,” this based upon statements made by Chinese leaders about emphasizing stronger consumption after years of investment-led growth. We described the wasteful and unsustainable investment strategy embraced by Beijing in July 2014 here in these digital pages: The Beijing Bubble: Will China’s Housing Addiction Damage the Global Economy?
The alleged move by China involves “a reliance on investment and exports for growth to one where consumption and markets play a bigger role,” Bloomberg News reports. “Economists and analysts are watching seven areas for quickening policy change that could bolster economic restructuring in 2015. They include a pickup in domestic demand, cheaper oil, energy-pricing reforms, improved welfare cover and a wave of privatizations.” Were that it were so.
Venerated Western observers such as Stephen Roach, former chief economist at Morgan Stanley, state emphatically that China’s shift to consumption-led growth is part of a dramatic change that will offer “fantastic opportunity” to the developed world. Such views of China reflect the Western dualism between political and economic activities, something that China has still yet to embrace. As an old China hand observed to me years ago, there is no division between Church and State in China, there is only the state.
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