The current economy in China is changing. They are moving from a very industrial style economy to a more service oriented economy. This is more difficult to plan for within their economy. Why is their service industry growing so fast? Is there enough disposable income to support this in the Chinese economy?
http://www.economist.com/blogs/analects/2013/04/economic-rebalancing
3 comments:
China's changing economy is a biproduct of a change of focus from the country's planners as well as the country's rising middle class. Currently, China is trying to switch to a more consumption driven economy. Also, wages are rising in China right now and the country's middle class is growing. I think these two factors will help each other and a consumption based economy will result.
I believe China is going through the same transition the US and other developed nations underwent from an industrialized economy to a service economy. Many areas of China, particularly the Eastern and coastal areas, are being rapidly developed and industrialized, so now they are able to accommodate the service sector better. I think the industrial sector of China will still grow because there is still a lot of untapped land/capital towards the Western part of China.
It will be interesting to see how China adapts to this shift, but I agree that the change was inevitable. It seems that when one country shifts its focus, the rest of the world will soon follow. This happened with the industrial revolution and it is now happening with the switch to a service focused economy. I do believe, however, that they will not see as much of a decrease in their industrial sector as some other countries as they still have potential for growth in that area.
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