ASSESSMENTS
China: The Shaky Structure of an Economic 'Miracle'
Apr 26, 2010 | 06:55 GMT
Summary
A serious defect of East Asia's export economic model is that it discourages the development of household consumption as a source of economic growth. Families are encouraged to save rather than spend, which depresses their consumption. At a certain point, leading East Asian economies have undergone transitions during which policies were adjusted to stabilize or boost consumption while allowing fixed investment to taper off, thereby creating more balanced economies. China, however, has yet to do so, and thus remains dangerously reliant on exports and investment.
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