In the midst of the global financial crisis, China is trying to figure out a way to shift the base of its economic growth to domestic consumption rather than exports. From Reuters:
Weaning the economy off exports in favor of domestic consumption driven by services is easier said than done.
But the closure of thousands of factories as export demand evaporates has dealt a serious blow to China’s confidence. President Hu Jintao has gone so far as to say that turning the challenges posed by the global credit crisis into opportunities would be a test of the Communist Party’s capacity to govern.
China, in short, realizes it needs to stand on its own feet.
So expectations are running high that a meeting starting on Monday of China’s top leaders to chart economic policy for 2009 will finally get serious about boosting home-grown spending.
In another effort to increase domestic consumption, the government has announced it will increase the money supply in the country by 17% in 2009, according to Bloomberg.
See also “China’s Economic Slowdown Is Deepening, Officials Say” from Bloomberg.
