Abstract
The pace of GDP growth in China has shifted from an average of 10 per cent between 1980 and 2010 to below 7 per cent recently. This change is to some extent desirable, if the moderated growth reflects a successful transition towards a more efficient, inclusive and sustainable economy. However, certain ideas about China’s transition are problematic. This article rebuts a particular notion that China needs to replace its investment-driven growth by consumption-driven growth. This notion is erroneous both theoretically and empirically. Should China follow this path, its growth in the future would decelerate more precipitously than intended, falling into the middle-income trap.
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