CHINA IS SENDING the world a very important message: A critical mid-course correction in its development model is in the offing - a shift away from export- and investment-led growth to more of a consumer-driven dynamic.
This change will not be abrupt, but it is likely to be an increasingly dominant characteristic of the Chinese growth outcome for years to come. It is aimed, first and foremost, at providing greater stability to the Chinese economy. It will also have profound implications for the global economy and world financial markets.
This conclusion is consistent with the basic thrust of China's just-enacted 11th Five-Year Plan. The essence of the coming adjustment is actually very simple: A long-standing strategy of resource mobilisation - powered by the recycling of a huge reservoir of domestic saving into export- and investment-led growth - has now outlived its usefulness.
The time is right for China to shift to more of a self-sustaining internal demand model, driven by private consumption.
China's rebalancing imperatives are obvious. The economy has become far too reliant on exports and fixed investment. Depending on the metric chosen, these two sectors now account for between 70 per cent and 80 per cent of overall Chinese gross domestic product.
And they are still expanding collectively at around a 25 per cent annual rate. If those trends were to continue, the sustainability of Chinese growth would be at risk.