Will China manage to emerge from its export-led growth model? - Natixis

Patrick Artus, Research Analyst at Natixis, explains that China has to manage to emerge from its export-led growth model to a growth model to sustain its growth and economic development.

Key Quotes

“Since the 1990s, Chinese growth has been driven by exports and market share gains in global trade.”

“But, due to the stagnation in global demand for manufactured products, the rise in production costs in China and the end of the process of value chain segmentation, China has to abandon this growth model led by exports and industry.”

“The Chinese authorities would like to shift to a growth model based on consumption and services, but the success of this transformation has been mixed.”

“Construction investment (housing and infrastructure) has been growing rapidly and its share in the Chinese economy is now excessive. The transition from an export-led growth model to one based on construction investment and therefore credit and fiscal deficits is not as satisfactory as a shift to a model based on private consumption. This raises questions about its sustainability.”