Global Markets Special Focus Report: China: shifting to a new growth model (January 03, 2013)
Global & Regional Focus Notes
03 January 2013
• Despite the unprecedented pace of economic expansion, China’s growth model has developed two significant imbalances, namely high investment and low consumption and a huge surplus in the current account balance. • The global crisis has revealed significant weaknesses in China’s growth model, raising questions about the sustainability of China’s high economic growth rates. • China urgently needs to rebalance its economy, in an orderly way, away from excessive reliance on investment and exports towards higher domestic consumption. • Such a transformation should make the country less susceptible to global trends and substantially boost living standards. It would also hold out the prospect for a more balanced and sustainable growth than the present model.