Boring is Good

Journalists don’t like boring, but when it comes to economics, for average folks it’s usually good news:

Also of note was the fact that consumption now accounted for 51.8 percent of Chinese GDP growth (it’s around 40 percent of the total economy) up from 50.4 percent a year ago, Barclays pointed out.

Barclays analysts led by Jian Chang wrote in a report dated Jan. 18 that, “We view demographic change, highlighted by a shrinking working age population, as a fundamental driver behind China’s transition from ‘miracle growth’ to normal development.”

China’s working age population is falling. Consumption is growing faster than GDP. The government’s goal is stability.

In other words, the transition to a modern, advanced economy is still going on. China in 20 years will be older and less export oriented. Dollars earned from exporting will be spent increasingly on imports instead of being loaned out or used to buy apartments that stay empty.

Get ready for a different China. Boring can be really powerful over the long run.

 

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