Much has been touted about China rebalancing into a consumer-based economy, and indeed, a quick search of the terms "China consumption" on the internet reveals more than 130 million results (as at February 22, 2017). Interestingly, the search terms "China rebalancing' comes up short, with only approximately half a million results. If this easy experiment tells us something worthwhile, it surely shows that the focus on China in recent times has been its consumption shift, and that the wider significance of rebalancing is less relevant and of less interest.
What exactly is China tilting away from and rebalancing towards? Let's pause for a moment and consider the origins of rebalancing in China's context. As early as March 2007, then-Premier Wen Jiabao publicly characterized the country’s economic model as “uncoordinated, unsteady, imbalanced and unsustainable”, and that planted the seeds for the current rebalancing rhetoric we pick up so frequently even almost 10 years on. What needed to be recalibrated then, and is still the case today, are the sources of economic growth, tilting away from investments, low-end manufacturing and cheap labor market advantage towards a model that is focused on innovation, services and a larger consumption component.
Source : UBS AG