Carnegie Endowment for International Peace
- Follow Carnegie
- Search
- Global Resources
Global Centers
Languages
If China is to avoid accumulating unsustainable levels of debt, it must reform its banking system by lowering interest rates, improving corporate governance, ensuring a more predictable regulatory framework, and providing higher quality information to investors.
Rebalancing China's growth from investment to consumption is necessary if China is to sustain long-term economic growth. Recent attempts to move in this direction have been insufficient; true rebalancing will require a more fundamental revision of the growth model.
As worries about China’s economy overheating escalate, Chinese policy makers are focusing on domestic rebalancing and placing an increased priority on increasing domestic consumption and developing less urbanized regions.
Ineffectual loan quotas have led Chinese banks to devise new, riskier lending mechanisms. This trend will continue as long as China maintains its loose monetary and credit policies.
China's leaders are engaged in a serious debate about rebalancing the Chinese economy, with reformers arguing that the growth model needs to transition away from an over reliance on investment in order to boost household consumption.
In light of the important leadership transition that looms on China's political horizon next year, Beijing's leadership appears intent on appearing unified.
With China leading the way, most Asian economies are experiencing rapid growth and rising income levels. However, there is a risk of an overheating economy with such a rapid trajectory—as seen in rising inflation rates in many countries.
China's leaders have exercised tight control over media coverage of the Middle East protests and reacted quickly to quell any domestic civil unrest.
Although President Hu Jintao's state visit to Washington helped stabilize U.S.-China relations, Beijing needs to prevent future bilateral tensions by pressuring North Korea to change its behavior, scaling back its own economic protectionism, and reassuring its neighbors.
While China is now the world’s second largest economy, rising inequality poses serious risks to the country’s internal stability.