A highly successful investment- and export-led growth strategy has positioned China as the second largest economy and as the largest exporter in the world. Households' consumption has played a minor role in its growth strategy, which is reflected in its unique and very high saving rates. In this paper we argue that the low weight of consumption in total expenditure is the result of the pervasiveness of the state in the economy, which aimed at impairing the growth of middle classes and,therefore, at preserving political stability. Nonetheless, an increase in purchasing power and the cultural individualisation of vast portions of the population is leading to an increase in popular mobilisation and social unrest. This indicates that, contrary to common pessimist analyses, prospects for democratization are perhaps stronger than usually presumed.
More papers in NIPE Working Papers from NIPE - Universidade do Minho Address: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal Contact information at EDIRC. Series data maintained by Maria João Thompson ().