China’s New Economic Plan Tackles the Rebalancing Puzzle
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Early reports on China’s Five-Year Plan outlining the government’s strategic priorities for 2016 to 2020 indicate preparations for slowed yet more sustainable economic growth. The plan involves ongoing transition toward an economy that promotes service industries, private consumption, innovation and entrepreneurship. The plan endorses a diversified economy, emphasizing quality rather than quantity for development and avoiding aimless pursuit of hyper-growth, explains Stephen S. Roach, a Yale faculty member. Roach maintains that a secure economy requires confident citizens. The government’s increased emphasis on a social safety net may convince Chinese households to feel more secure about their future and confident about spending, key for sustained growth. A final and detailed plan will be released in March. – YaleGlobal