Time for China to spend more and save less

The atmospherics surrounding the recent National People’s Congress all came down to one question: when exactly will China become the world’s biggest economy?

Communist Party leader Xi Jinping didn’t offer a specific answer. But it’s clear that the new reform team Xi has assembled is accelerating the timeline by prioritizing consumption over investment.

There’s not a moment to waste. For years, economists from East to West knew that China needs to prod consumers to save less and spend more. Unless Xi can pivot to a consumption-driven model, it will delay the moment when China surpasses the US in gross domestic product (GDP) terms – or even forfeit its chance to be No 1.