Why Is China’s Consumption Rate So Low?
When it comes to household consumption expenditure, China is probably not lagging as far behind other major economies as official data suggest. Nonetheless, as the relative importance of capital accumulation declines, and returns on investment continue to fall, more must be done to boost disposable household income.
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SHANGHAI – In May, US President Joe Biden’s administration accused China of “flooding global markets” with “artificially low-priced exports.” Such accusations are not new, nor are they likely to stop any time soon. But many of those complaining about Chinese overcapacity overlook a critical fact: China’s net exports have been falling relative to GDP since 2008, and its trade surplus in goods has shrunk to less than 2% of GDP.