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What the China Pessimists Are Getting Wrong

While China is probably in a much better position than bearish observers claim, the economy would benefit if Chinese households saved less and consumed more. But the first step toward boosting domestic consumption is jump-starting growth – and that requires a new wave of government-financed infrastructure investment.

BEIJING – Economists have lately been sounding the alarm that China’s economic development is teetering on the edge of a crisis. The problem, they argue, is that China’s growth is driven by extremely high levels of capital investment, and that private consumption is being suppressed. Is a crisis really looming, as many predict?