From the Emerging Trends Trader (AUSTRALIA) –
Mainstream investment analysts and commentators are unanimous about one thing when it comes to China: the Middle Kingdom needs to continue adjusting from an economic model that relies on manufacturing-led growth, to one that places consumption as the key driver of growth.
They say it’s a natural (but potentially painful) transition.
In one way, the mainstream analysts and commentators are right; the Chinese economy probably does need to adapt. It’s a natural progression as the economy and population become wealthier.
However, while it’s likely that China will eventually readjust its economy towards consumption, and away from manufacturing, it won’t switch directly from one to the next. Instead, there is another far more important part of the transition which must happen first…