Demand-side reform and long-term GDP growth

CHINA FINANCIAL - Report 17 Dec 2020 by Michael Pettis

Special points to highlight in this issue:

* In its meeting last Friday the Politburo coined a new term, "demand-side reform", as something it would implement along with the “supply-side reforms” it has long promised. This is probably going to be a very important policy innovation that finally recognizes the main impediment to economic rebalancing.

* But while it might get the arithmetic right, the real key to rebalancing involves a substantial income transfer that would have significant political implications. It is good that Beijing finally formally recognizes what it needs to do, but this doesn’t mean that it will be able to do it easily.

* In the rest of this report, I have a very long essay on Chinese demographics and their implications for the country’s long-term growth.

Now read on...

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