Risks behind the Opportunities

Chi Lo

Chapter 9 in China After the Subprime Crisis, 2010, pp 138-153 from Palgrave Macmillan

Abstract: Abstract China’s economic expansion and structural change opportunities in the post-subprime years are certainly not going to be smooth. One imminent risk is a continuing (or even worsening) disequilibrium between aggregate saving and investment on a global scale in the post-subprime world. Arguably, the problem at the root of China’s persistent under-consumption problem is the Chinese government’s development policy of making China the world’s pre-eminent producer nation. This policy is in fact a social policy aimed at maintaining the stability of the country. All other factors, including a broken social safety net and an ageing population needing to save for retirement, are aggravating factors, in my view. As long as this ‘social production’ policy orientation remains unchanged, it will hold back consumption and render any rebalancing effort towards consumption-driven growth ineffective. If China cannot rebalance, the other (consumption) side of the world cannot rebalance.

Keywords: Real Estate; Housing Price; Asset Market; Chinese Economy; Property Sector (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1057/9780230298965_10

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