{"id":1341,"date":"2014-04-02T08:15:34","date_gmt":"2014-04-02T07:15:34","guid":{"rendered":"http:\/\/blogg.lnu.se\/china-research\/?p=1341"},"modified":"2014-04-02T08:16:41","modified_gmt":"2014-04-02T07:16:41","slug":"chinas-new-consumption-driven-growth-model-inconsistencies-impediments-and-indebtedness","status":"publish","type":"post","link":"https:\/\/blogg.lnu.se\/china-research\/?p=1341","title":{"rendered":"China\u2019s New Consumption-driven Growth Model &#8211; Inconsistencies, Impediments and Indebtedness"},"content":{"rendered":"<p><em>Doris Fischer\u2019s<\/em> article above is illuminating. She points at different inconsistencies and impediments in China\u2019s new consumption-driven growth model which she also calls an \u201curbanization model\u201d. I agree with her doubts \u2013 but would like to argue partly with some additional points.<\/p>\n<p>Doris Fischer singles out a number of questions and conclusions that have been neglected or simply not been recognized so far. One is the possible strength of the planned urbanization process with its effects on private consumption (furniture, clothes, food, cars, etc,). Another one could be the ever increasing population in the metropolitan and other city areas which per se should strengthen the demand for consumption goods, supported in my view also by the planned deregulation of the \u2013 so far &#8211; very impeding urban registration process (\u201chukou\u201d). Fischer also raises the question whether the massive plans of urbanization via local investments rather should be regarded as a local investment issue than primarily a plan for sustained higher growth of private consumption. Here we can find an obvious <strong>inconsistency <\/strong>in the official Chinese plans<strong>.<\/strong><\/p>\n<p>In Doris Fischer\u2019s eyes, the new generation of Chinese leaders is creating more private consumption and &#8211; at the same time &#8211; also more public investment. I wonder how such plans can be brought in line with partly already existing high local <strong>indebtedness<\/strong>?<strong> <\/strong>She also raises very correctly the very important question where all these new jobs in the urban areas should be created. I wonder also how these migrating people can be integrated in the intended process of improved and new technology (see the corresponding decisions from the Third Plenum). Furthermore, one should get confused when thinking more deeply about the environmental consequences of the prioritized urbanization process. How can the huge challenges from air pollution, poor water quality and waste be handled in real life? Where are the <em>decisive<\/em> government attacks against all the existing <strong>impediments <\/strong>to a clearly improved environment (which the whole globe and the Chinese people want to see)? They cannot be watched yet on a wider scale.<\/p>\n<p>However, I\u2019m sure that the Chinese policymakers are familiar with all the environmental threats that rapidly accelerating urbanization may cause. I got this impression when I visited China two months ago. Thus, we come back to the conflicts of goals in the China\u2019s marketization and deregulation process \u2013 conflicts of goals which I will take up in a paper at the SNEE conference in M\u00f6lle\/Sweden in May 2014. These conflicts of goals may also be a main motivation for the dampened estimate for China\u2019s potential GDP-growth somewhere in the neighborhood of 5 \u00bd -5 \u00be% in 2020, according to LNU\u2019s recent China Survey Panel.<\/p>\n<p>All in all, indications remain strong that China\u2019s economy will be downsizing (somewhat) in the next few years, probably also structurally by moving to the intended consumption-driven growth. This structural change of growth model will be more complicated to handle than the (previous) export-\/investment-driven model. But it would not be a bad development by definition if major improvements of the environment were allowed to happen and simultaneously reasonable growth rates still could be achieved in line with the predicted potential rate of growth.<\/p>\n<p>One big question, however, has not yet been considered by markets and most economists very seriously:\u00a0 <em>Could it happen that Chinese private households will become more visibly interested in an acceleration of their financial investments five to ten years from now instead of markedly more rapidly increasing consumption \u2013 i.e. at a time when the supply of reasonable financial investment products finally has been widened and modernized? <\/em><\/p>\n<p>At least theoretically, it could. What could happen in such a case, will be another story to elaborate on at some point in the future.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/image.lnu.se\/image.ashx?id=117818&amp;w=110\" alt=\"\" width=\"110\" height=\"136\" \/><\/p>\n<p><strong><em>Hubert Fromlet<\/em><\/strong><em><br \/>\n<\/em>Visiting Professor of International Economics, Linnaeus University<br \/>\n<a href=\"..\/editorial-board\/\">Editorial board<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/blogg.lnu.se\/china-research\">Back to Start Page<\/a><em><br \/>\n<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Doris Fischer\u2019s article above is illuminating. She points at different inconsistencies and impediments in China\u2019s new consumption-driven growth model which she also calls an \u201curbanization model\u201d. I agree with her doubts \u2013 but would like to argue partly with some additional points. Doris Fischer singles out a number of questions and conclusions that have been [&hellip;]<\/p>\n","protected":false},"author":174,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13398],"tags":[],"class_list":["post-1341","post","type-post","status-publish","format-standard","hentry","category-china-2"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>China\u2019s New Consumption-driven Growth Model - Inconsistencies, Impediments and Indebtedness - China Research<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/blogg.lnu.se\/china-research\/?p=1341\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"China\u2019s New Consumption-driven Growth Model - Inconsistencies, Impediments and Indebtedness - China Research\" \/>\r\n<meta property=\"og:description\" content=\"Doris Fischer\u2019s article above is illuminating. She points at different inconsistencies and impediments in China\u2019s new consumption-driven growth model which she also calls an \u201curbanization model\u201d. I agree with her doubts \u2013 but would like to argue partly with some additional points. Doris Fischer singles out a number of questions and conclusions that have been [&hellip;]\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/blogg.lnu.se\/china-research\/?p=1341\" \/>\r\n<meta property=\"og:site_name\" content=\"China Research\" \/>\r\n<meta property=\"article:published_time\" content=\"2014-04-02T07:15:34+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2014-04-02T07:16:41+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/image.lnu.se\/image.ashx?id=117818&amp;w=110\" \/>\r\n<meta name=\"author\" content=\"Hubert Fromlet, Kalmar\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hubert Fromlet, Kalmar\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/?p=1341\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?p=1341\",\"name\":\"China\u2019s New Consumption-driven Growth Model - Inconsistencies, Impediments and Indebtedness - China Research\",\"isPartOf\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\"},\"datePublished\":\"2014-04-02T07:15:34+00:00\",\"dateModified\":\"2014-04-02T07:16:41+00:00\",\"author\":{\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/7dbc3e79d44dfa0d6bb4e1f625ad2ae5\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/blogg.lnu.se\/china-research\/?p=1341\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#website\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/\",\"name\":\"China Research\",\"description\":\"A discussion forum on emerging markets, mainly China  \u2013                                          from a macro, micro, institutional and corporate angle.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/blogg.lnu.se\/china-research\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/blogg.lnu.se\/china-research\/#\/schema\/person\/7dbc3e79d44dfa0d6bb4e1f625ad2ae5\",\"name\":\"Hubert Fromlet, Kalmar\",\"url\":\"https:\/\/blogg.lnu.se\/china-research\/?author=174\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"China\u2019s New Consumption-driven Growth Model - Inconsistencies, Impediments and Indebtedness - China Research","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/blogg.lnu.se\/china-research\/?p=1341","og_locale":"en_US","og_type":"article","og_title":"China\u2019s New Consumption-driven Growth Model - Inconsistencies, Impediments and Indebtedness - China Research","og_description":"Doris Fischer\u2019s article above is illuminating. She points at different inconsistencies and impediments in China\u2019s new consumption-driven growth model which she also calls an \u201curbanization model\u201d. I agree with her doubts \u2013 but would like to argue partly with some additional points. 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