New Growth Model

The Chinese government understands the urgency to restructure its economy as the viability of its export and investment-led model came under increased pressure.

China's new growth model allocates a lesser place for exports as an economic driver. The share of exports in China's GDP rose from about 5 per cent in 1978 to a peak of 37 per cent in 2005 (below graph), but has fallen since.

While China is already experiencing a 'consumption revolution' driven by urbanisation and higher personal income, a firm hand has accelerated the structural transition to a domestic demand-led growth model.

For China, the transition towards new, advanced-economy growth drivers offers a route to sustainable economic development.

Service sectors including IT platforms, healthcare, education and insurance are currently underrepresented and will be the prime beneficiaries of a consumer-oriented economy.