Advertisement
Advertisement
Michael Pettis
Michael Pettis
Michael Pettis is a senior fellow at Carnegie China and teaches finance at Peking University. His most recent book is “Trade Wars are Class Wars”.

This will leave it with two choices: suffer the the pain of lower GDP growth, or encourage consumption to drive demand and suffer the pain of a disruptive transformation of the country’s development model.

videocam

It will be impossible to wring speculation out of the sector without much lower prices and a significant increase in financial distress. But the longer the economy is dependent on an ever-rising property market, the higher the economic costs of reform.

videocam

China has little choice: it needs to transition from an investment to consumption-driven economy, even if doing so will be painful. Since boosting consumption until it surpasses investment growth is practically impossible, China will need to slow down GDP growth altogether.

videocam
Advertisement