1/7
Caixin quotes Liu He as saying during his Davos speech that "China is stepping up efforts to foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other."
caixinglobal.com
Caixin quotes Liu He as saying during his Davos speech that "China is stepping up efforts to foster a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other."
caixinglobal.com
2/7
He continues: "The focus of domestic circulation is on expanding internal demand, promoting industrial upgrade, developing a consumption-led growth model, and re-balancing the economy."
He continues: "The focus of domestic circulation is on expanding internal demand, promoting industrial upgrade, developing a consumption-led growth model, and re-balancing the economy."
3/7
The good news, of course, is that Beijing says it wants to expand the role of internal demand as it develops a consumption-led growth model. The bad news is that it continues to embed this strategy within the dual circulation model.
carnegieendowment.org
The good news, of course, is that Beijing says it wants to expand the role of internal demand as it develops a consumption-led growth model. The bad news is that it continues to embed this strategy within the dual circulation model.
carnegieendowment.org
4/7
As I've argued before, the secret of China's success in its eternal circulation (i.e. export-led strategy), like that of other export-led surplus economies, involves direct and indirect transfers from households that effectively subsidize the tradable goods sectors.
As I've argued before, the secret of China's success in its eternal circulation (i.e. export-led strategy), like that of other export-led surplus economies, involves direct and indirect transfers from households that effectively subsidize the tradable goods sectors.
5/7
But it is precisely because of these transfers that domestic circulation (mainly consumption) is so weak. China, in other words, cannot choose to strengthen both its export sector and domestic consumption without major transfers from some other sector.
But it is precisely because of these transfers that domestic circulation (mainly consumption) is so weak. China, in other words, cannot choose to strengthen both its export sector and domestic consumption without major transfers from some other sector.
6/7
Common prosperity implies that the transfers will come from the rich, but while this might make sense in some countries, it only helps at the margin in China. The household share of GDP in China is too low for redistribution within the household sector to make the difference.
Common prosperity implies that the transfers will come from the rich, but while this might make sense in some countries, it only helps at the margin in China. The household share of GDP in China is too low for redistribution within the household sector to make the difference.
7/7
Export-led surplus countries often talk about boosting the role of domestic consumption (e.g. Japan since the 1990s) but don't often succeed. I'd argue that this is because they won't accept the required tradeoff between competitive exports and stronger domestic consumption.
Export-led surplus countries often talk about boosting the role of domestic consumption (e.g. Japan since the 1990s) but don't often succeed. I'd argue that this is because they won't accept the required tradeoff between competitive exports and stronger domestic consumption.
Loading suggestions...