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Why Are China’s Households in the Doldrums?

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Abstract

A perennial challenge with China’s growth model has been overly high investment spending relative to GDP and unusually low consumer spending, something which China has long struggled to rebalance. As China attempts to move away from credit-intensive, investment-focused growth, the economy’s growth will have to rely on higher consumer spending. However, a prolonged household borrowing binge, COVID scarring and a deep slump in the property market in China have damaged household balance sheets and eroded consumer sentiment. In this post, we examine the impact of recent shocks on Chinese household behavior for clues around the outlook for reviving consumption and economic growth in China.

Suggested Citation

  • Jeffrey B. Dawson, 2023. "Why Are China’s Households in the Doldrums?," Liberty Street Economics 20230927, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:96940
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    More about this item

    Keywords

    China; international economics; macroeconomics;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F00 - International Economics - - General - - - General

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