from the Kansas Fed
– this post authored by Jun Nie and Andrew Palmer
After steadily declining for nearly half a century, the share of consumer spending in China’s GDP has recently increased. Economists and policymakers widely agree that the share of consumer spending must increase for China to continue its economic development; sustaining growth primarily on exports and investment will become more difficult in the longer run. Moreover, if China successfully rebalances economic growth toward a greater share of consumption, the global economy may benefit. Stronger Chinese demand boosts exports from the rest of the world.