Consumption versus investment

Donna H. J. Kwok,

Greater China economist for HSBC

Consumption versus investment: Risks to China's long-term economic health greater if it doesn't consume more.

Main points

It will take a further 10 years to create a more consumption-led economic model but the process has to unfold gradually.

At current rate of growth, China's consumption will reach Western levels only by 2070, which is too slow.

Jian Chang,

Director, China economist, at Barclays

Consumption versus investment: Significant room for greater consumption and much more market-led economy.

Main points

Investment has been running at unsustainable levels.

Income distribution is key to boosting consumption since the pie cannot continue to grow much bigger.

Louis Kuijs,

China economist at Royal Bank of Scotland

Consumption versus investment: China needs more balanced growth, including greater consumption.

Main points

Heavy investment-led model has served the country well but it is not possible for it to continue.

Previous administration was right to focus on welfare reform.

Hans Hendrischke,

Professor of Chinese business and management at the University of Sydney Business School

Consumption versus investment: Sustainable consumption can only be achieved through investment in upgrading industry.

Main points

Consumption is not main problem since it is higher than in many other countries.

Danger of simplifying debate since it is not an either-or.

Zhu Tian, Professor of economics at CEIBS

Consumption versus investment: No such thing as consumption-led growth.

Main points

Boosting consumption only valid when economy has unused capacity and not for building capacity.

Household surveys under-report consumption in China.

Michael Spence, Professor of economics at the Leonard N. Stern School of Business at New York University

Consumption versus investment: Higher levels of consumption are an important part of restructuring the China economy.

Main points

Achieving supply-side shifts through investment are not sufficient on their own for economic development since demand factors also important.

Credit expansion and tax cuts not the right way forward.

Junheng Li,

Founder of J.L. Warren Capital

Consumption versus investment: Should not be seen as an all or nothing binary question.

Main points

Domestic consumption is too low.

Current economic model built on misallocation of resources by state-owned banks which affects the quality of investment.

Tomas Sedlacek,

Chief macroeconomic strategist for CSOB bank

Consumption versus investment: China should stick to its investment-led model.

Main points

Domestic consumption is fine so long as it is not based on debt.

Credit means faith in Latin and if you rely too much on it, it can destabilize the economy.