IDEAS home Printed from
   My bibliography  Save this article

China in the 2010s: The Economy of Overheating


  • NOSOV, Vasilii D.

    (Sberbank of Russia)


In recent years, the word “overheating” is very often used regarding to China’s economy. Indeed, over the past 8 years equity market bubble of 2014–2015, real estate bubbles of 2010–2011, 2012–2013 and 2015–2017 and bitcoin market bubble of 2016 were in the spotlight. Upon close analysis it is found that the bubbles were provoked by the policy of the authorities. The formation of a bubble forces regulators to implement restrictive measures, but at the same time the authorities stimulate the emergence of a rush demand on another market. Investors’ funds flow into another market, which leads to the formation of a new bubble. Maintenance of markets in overheating condition is a very atypical policy. It is necessary to clarify what mechanisms are used by the Chinese authorities for markers’s overheating and cooling. It is also important to understand the goals of such a policy in order to analize China’s economy and to make predictions of further PRC development. It is illustrated in this article that he main reason to push the authorities to create conditions for bubble emergence is the necessity to stimulate private consumption. In China, there is a historically determined problem of the abnormally high propensity to save. The creation of bubbles is an attempt to overcome population habits, an effort to “accustom” the Chinese not to put all the money into a deposit or “under the mattress”. Investing part of the funds in investment goods with almost guaranteed high yield, the Chinese receive additional income, and, as statistics show, they increase consumption.

Suggested Citation

  • NOSOV, Vasilii D., 2017. "China in the 2010s: The Economy of Overheating," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 24-41, December.
  • Handle: RePEc:rnp:ecopol:ep1761

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Huang, Yukon, 2017. "Cracking the China Conundrum: Why Conventional Economic Wisdom is Often Wrong," OUP Catalogue, Oxford University Press, number 9780190630034.
    2. Michael Pettis, 2013. "The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy," Economics Books, Princeton University Press, edition 1, number 9936, June.
    Full references (including those not matched with items on IDEAS)

    More about this item


    China; equity market; real estate market; economic policy; consumer demand.;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnp:ecopol:ep1761. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RANEPA maintainer). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.