I was reading this article China’s export-led growth model, here I am Quoting the author while writing about the Chinese GDP growth:
I hope you can answer my questions:
Since when is high savings and surplus current account balance a bad indicator?Export-led growth has also created structural problems that have to be addressed to achieve more balanced growth. The most important problems are high savings and persistent current account surpluses.
What does this mean? Chinese people are spending their money elsewhere? are we talking about tourism?At a low income level, China has been forced to export its savings to much richer countries.
Why is a low consumption society / high saving society seen as a bad indicator?Related to this problem is the slow growth of domestic consumption and the declining share of consumption in GDP. This can be mostly attributed to the slower growth of household income relative to the growth of GDP. The other side of the story is faster growth of corporate income and government revenue.
why is an investment-driven economy bad? isn't investment in research and development, infrastructure and further expansion a good indicator of a sustainable and healthy economy?Enterprises have reinvested most of their profits and the government has spent a large proportion of its revenue on capital formation. The result is that China is still an investment-driven economy.
finally,
What is export-led growth considered bad?
I always read that export-led growth has its limits, why?