1/6
Good article. Winston Mok is right to argue that improved social welfare and policies that raise rural incomes will help China "rebalance" its economy towards domestic consumption as its driving force.
scmp.com/comment/opinio…
Good article. Winston Mok is right to argue that improved social welfare and policies that raise rural incomes will help China "rebalance" its economy towards domestic consumption as its driving force.
scmp.com/comment/opinio…
2/6
In fact anything that directly or indirectly transfers income to ordinary households will help, although as Mok points out, we are talking about huge transfers – perhaps as much as 20-30 percentage points of GDP by his count.
In fact anything that directly or indirectly transfers income to ordinary households will help, although as Mok points out, we are talking about huge transfers – perhaps as much as 20-30 percentage points of GDP by his count.
3/6
But what he, along with most other analysts, doesn't discuss are the political implications of rebalancing, which also explain why it has been so hard to do in the past. Given the sheer extent of the Chinese imbalances (the greatest in history) for China sufficiently...
But what he, along with most other analysts, doesn't discuss are the political implications of rebalancing, which also explain why it has been so hard to do in the past. Given the sheer extent of the Chinese imbalances (the greatest in history) for China sufficiently...
4/6
to rebalance its economy requires an increase in the GDP share retained by households of between one-third and one-half, and a commensurate decrease in the combined share retained by government and business, preferably local governments.
to rebalance its economy requires an increase in the GDP share retained by households of between one-third and one-half, and a commensurate decrease in the combined share retained by government and business, preferably local governments.
5/6
The ratio of household to non-household GDP, in other words, has to double or triple, implying a huge shift in relative political power. The question should be whether an increasingly centralized China, with a growing state sector, is consistent with a rebalancing China.
The ratio of household to non-household GDP, in other words, has to double or triple, implying a huge shift in relative political power. The question should be whether an increasingly centralized China, with a growing state sector, is consistent with a rebalancing China.
6/6
I think probably not, unless local governments are forced to absorb more than 100% of the shift in income and in power. Perhaps this is why 13 years of putative "rebalancing" and putative "deleveraging" have accomplished so little.
I think probably not, unless local governments are forced to absorb more than 100% of the shift in income and in power. Perhaps this is why 13 years of putative "rebalancing" and putative "deleveraging" have accomplished so little.
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