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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.

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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.

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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.

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