China is on course to become the world’s third-largest consumer market by 2020. Nevertheless, private consumption constitutes a remarkably low share of China’s economy, whose rapid growth in recent years has come on the back of a development model that has rested heavily on industrial investment and exports. Even before the global financial crisis buffeted China and proved its vulnerability to a downturn in its key export markets, the political leadership of the People’s Republic had set itself a new aim of rebalancing its economic mix and boosting the consumption share of the economy. If China succeeds in this aim, it would not only boost GDP, jobs, and incomes, but it would also insulate itself from volatility imported from overseas.

Authors: Jonathan Woetzel, Janamitra Devan, Richard Dobbs, Adam Eichner, Stefano Negri, Micah Rowland

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