Professor Susan Shirk and colleagues in the Wall Street Journal Asia
"The Stimulus China Needs: Reform the economy to boost consumption"
04/30/2009
Stephen Green, Susan Shirk and Zhang Bin ,
The Wall Street Journal Asia
China's economy has apparently bounced back from the horror of the fourth quarter of 2008, when broad swathes of industry stuttered to a sudden halt. The hills are now alive with the sound of even more building than usual. Indeed, some have called it the most successful stimulus package in history.
It is important not to get carried away, though. Companies have more orders on their books, but the orders are all short-term. Exports are not going to recover anytime soon, and even if they do, boosting domestic consumption will be the key to sustaining China's growth into the future, and to recalibrating China's unbalanced economic relationship with the rest of the world, including the United States. So, the question is, "What will it take to boost household income and provide incentives for households to consume more?"
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