Why is the variability of growth in China too high?

- "Chinese growth is highly variable, with a quick succession of periods of sharp growth and periods of pronounced economic slowdown."
- "We believe this is explained by the excessively low weight of consumption, which is not very cyclical, compared with the (highly variable) cyclical demand components: investment (especially in construction), exports, etc."
- "The following would therefore be needed in China:
• a less brutal management of monetary policy (of lending conditions);• accelerating the government programme aimed at supporting wage earners and boosting consumption."
- "The worrying point is that - for the time being - Chinese growth becomes insufficient when credit no longer finances speculative investments."

Natixis Flash Economics 440 20100906

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