It has been 40 years since Deng Xiaoping launched China’s “reform and opening up” policy. By most metrics, China’s economic “miracle” has indeed been nothing short of preternatural, with some 800 million people rising out of poverty over the span of just a few generations and the country becoming an indispensable part of the global economy. But this growth happened neither evenly nor sustainably, and it’s running out of the sort of low-hanging fruits that fueled China’s rise.
As a result, like most developing countries, China has a fundamental problem: It wants to transition to a consumption-based economy (which is more stable than relying on exports and investment), but its domestic consumer base is not yet wealthy enough to support the level of economic productivity needed to allow for that transition. With a trade war looming, a shift to domestic consumption is becoming all the more urgent. Beijing is scrambling to conjure up yet another economic miracl