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The WSJ is reporting that China's younger generation borrows and spends -- and that is changing the nature of China's economy.
Perhaps. But, for now, the data is still driven by the older generation. China's national savings rate is way higher than the other large economies
Perhaps. But, for now, the data is still driven by the older generation. China's national savings rate is way higher than the other large economies
And East Asia more generally is still a huge source of savings for the global economy. China's savings rate is down a bit, but from a very high level. It is still higher than its neighbors, so China's faster relative growth pulled the regional savings rate up (v 10ys ago)...
WSJ story is thus interesting -- but in my view it paints an incomplete picture of China's challenge. China overall still needs more consumption (and more labor income so the consumption doesn't need to be debt financed, per @michaelxpettis )
wsj.com/articles/young…
wsj.com/articles/young…
@michaelxpettis The risk to the world China poses these days doesn't stem from the rapid growth in China's internal debt. It rather comes from the fact that absent such growth in internal debt, China would return to running massive trade surpluses
cfr.org/blog/imfs-new-…
cfr.org/blog/imfs-new-…
