China changes its growth model to focus on domestic consumption
China's longstanding growth model, based on investment and exports is to be replaced with one based on services and domestic consumption, in an attempt to rebalance the economy. However, this is set to be a difficult task for the government since Chinese people prefer to accumulate their wealth and have precautionary savings instead of spending their money. Due to China's ageing population older workers have to save for retirement as their pensions are not strong enough and the one-child policy means there is not much support to look after the older generations. Meanwhile, those that work have seen their incomes share of GDP drop from about 70% in 1990 to about 60% in 2010. Therefore, economic rebalancing will not be able to take place until the next generation grow up as older generations are too concerned with saving. 

The chinese model is distorted because it emhasizes Investment over Employment Growth. Does ProjSynd have an editor?



Investment and employment growth are neither in an economic equation, on a spectrum or able to be dichotomized.



This is merely to discuss internal Chinese ideological dialogues and repositioning on the matter.



The model is imbalanced over preferencing Investment over consumption in the construction of GDP. Where Investment still compromises, nearly (just over 50%) of GDP, this is why Household Income as a share of GDp could not possibly be over the high 40% of GDP, and is likely in the high 30's to 40's.



Regardless the model is reliant on investment, and alterations can only occur proportionally, ver an extended period of time.



Further due to baking in preferences, it would be a necessary long while due to how long they have kept income share, and built the notion of becoming fabulously wealthy, all inhibiting switching.



For rebalancing to occur, headline numbers in investment as a percentage of GDP need to grow more slowly than Consumption as a percentage of GDP. This is a first order matter. second order may be the growth in services, and a third order matter might be growth in Service employment. But of course, rebalancing is not dichotomized around growth in services or service employment against employment, but headline growth in consumption versus investment as a share of GDP more generally.



While Nationalists pundits and sell-side analysts may desire it to be different, this is the prime issue, although likely they will keep on confounding the issues to keep the funds flowing.