China's Economic Transition to Take Longer Than Expected

[Frodo]

From a month ago, but still worth a read:

China's Consumers Have a Long Way to Go

DEC 3, 2015 3:12 PM EST
By Justin Fox

You must be logged in to read this quote.

That’s from “Sold in China: Transitioning to a Consumer Led Economy,” a report released this summer by the Demand Institute, a joint venture of the Conference Board and Nielsen. So is this:



The shrinking of consumption’s share of China’s economy started well before 1999 -- in 1952, consumption made up 76 percent of economic activity. It can’t keep going down forever, and all signs are that its decline has halted since 2011. But the likeliest path forward, again according the Demand Institute, will be one in which consumption stays stuck at a relatively low percentage of gross domestic product.  That’s based on an examination of economic development in 167 countries from 1950 to 2011, which found that:

You must be logged in to read this quote.

What that translates to, according to yet another Demand Institute report released last month, is a forecast of aggregate consumer spending growth in China of 5.2 percent a year for the next 10 years. That’s much faster than the  growth in consumer demand we’re likely to see in any other major economy during that period -- so multinational corporations with stuff to sell will continue to be very interested in the place. But that growth will remain concentrated in a relatively small number of cities, a lot of the money will be spent on domestically produced services and the growth probably won’t be enough for China to serve as a major engine of global consumer demand just yet.[/quote]

So it doesn't look as if we can look to China to power world economic growth, at least for the time being.

[Ebsy]

Are we surprised that the Chinese don't have endless appetite for the cheap crap made in China?

[Ebsy]

It's beginning to look a lot like a recession in China.

[Blue3]

Well China had that near-crisis last year too.

[Simfan34]

I've long been fairly bearish about China but the predicted crash has until now failed to materialise. Even after the precipitous fall last year, the Shanghai SE was marginally up for the year. It will be a downwards sloping road, but I increasingly think it will be a long one, not a steep one.

[Ban my account ffs!]

I've long been fairly bearish about China but the predicted crash has until now failed to materialise. Even after the precipitous fall last year, the Shanghai SE was marginally up for the year. It will be a downwards sloping road, but I increasingly think it will be a long one, not a steep one.

I've had the idea now for a few years that China will feather down into a Japan style permanent slowdown.  They might not crash like Japan or even stagnate (since there is so much more room for growth yet with all those remaining poor Chinese people)... but I think growth will be less than half what it was going forward after an initial panic.

I think investment will fall of rapidly as bubbles pop and the government tries to ease its way out of the situation... and while consumption will grow.. it will not grow enough to make up for that for a little while yet... so there will be stagnation or even contraction.

What we want to avoid is a massive drop in investment that triggers a ton of belt tightening.  Where they were loose with borrowing for infrastructure.. now they need to be loose with personal credit.  Put those trinkets on the Visa, baby!

[Kingpoleon]

If China has a recession, I expect India will become very important in the global economy.

[Ban my account ffs!]

If China has a recession, I expect India will become very important in the global economy.

If China has a recession, China will still be very important to the global economy.