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China unveils its latest five-year plan this week, the 13th since the launch of communism there, but the first in at least 30 years to take place amidst an economic slowdown. The recent stock market crash and factory data suggesting manufacturing could be in recession has cast a big shadow over China. Future hopes are being pinned on so-called economic rebalancing, transforming the economy from an export- and investment-driven model to a more Western-style consumer one. So how is China going about that and what can we expect from the five-year plan? Questions I put to Tyler Cowen, professor of economics at George Mason University in the US.
China's done very little to rebalance. Since 2009 they've mostly maintained their rate of economic growth by borrowing and taking out a lot more debt, and the central government continues to invest a very high share of GDP. So so far rebalancing is a myth.
Really? What might they do?
Well, ideally what they would like to do is to have a higher level of consumption and that would mean turning over resources from the state-owned enterprises and government landownership to the citizenry and then they would spend it. The problem with doing that is that in the meantime the rate of growth tends to fall, because spending money doesn't give you the same rate of return as investing. | 
发表于 2016-10-30 15:29:43