Insufficient Domestic Demand in China: An Exaggerated Story

Abstract

In both the academic world and the policy circles, insufficient domestic demands in China are widely believed to aggravate global economic imbalance and set back China's efforts for a sustained economic growth. Such a notion, however, has been exaggerated, so has the role of China in aggravating global economic imbalance. Moreover, contending China's under consumption is not only misleading but also detrimental to China's sustainable development. Misleading it is since it is based on flawed statistical methods and there are some missing pies. It is detrimental in the sense that the whole discussions are centered on a goal of economic growth, without paying due respect to the nature. Untempered expansion of China's domestic consumption comparable with the US would not necessarily bode well for China and the world. More important is to transform the undergoing mode of production and consumption and better balance the relationship among human beings, natural resources and the ecology.