2/6 It cites a policy adviser as saying: "The allocation of resources will shift more towards consumption, as large-scale expansion of traditional industries and infrastructure has reached its limit. Future investment will focus on high-tech industries and new infrastructure."

3/6 It's best to remain skeptical. China's over-reliance on investment and exports to power the economy sustainably reached its limit many years ago, with the imbalance showing up as one of the fastest increases in a country's debt burden in history.

4/6 It has also promised to raise the consumption share of GDP many years ago. The fact that it hasn't resolved either wasn't the result of an oversight on the part of policy makers. It is because overinvestment and weak consumption are structural.

5/6 Some analysts are saying that China plans over the next 5 years to raise the consumption share of GDP by 5 percentage points, but they haven't done the math. If China is to pull this off while growing by 4.5-5.0 % a year, consumption will have to grow by 6.4-6.9%

6/6 This is not impossible, but it will require such large transfers that these will undermine political, financial and economic institutions that were built up around the past 3-4 decades. Far more likely is rebalancing under much slower growth. https://carnegieendowment.org/...

@michaelxpettis “… China's over-reliance on investment and exports to power the economy sustainably reached its limit many years ago, with the imbalance showing up as one of the fastest increases in a country's debt burden in history.” 👀

@michaelxpettis Honestly, Michael: the main thread is how to maintain CCP governance. If they plan to increase the consumption rate, then requires better social security to support, which then requires CCP less control and less general tax upon residents. I guess this is just to calm investors