China’s leaders are “bizarrely unwilling” to use more government spending to support consumer demand instead of production, according to Nobel laureate in economics Paul Krugman.
“The fact that we seem to have a complete lack of realism on the part of the Chinese is a threat to all of us,”
Krugman echoed criticism by U.S. economic officials including Treasury Secretary Janet Yellen that China can’t simply export its way out of trouble. The comments come amid renewed concern in the U.S. and Europe over what is viewed as Chinese overproduction and the dumping of heavily subsidized products overseas
China’s whole economic model is not sustainable because of “vastly inadequate” domestic spending and a lack of investment opportunities, he added. Beijing should be supporting demand not more production, he said.
Probably stuff like reducing the savings rate for consumers by encouraging the use of credit (lower interest rates, losen credit regulations) and lowering state spending on building up productive forces.
Ironically enough, if china develops its productive capacities more and the neocon ghouls stop the military pressure, Chinese planners could easily afford to pivot to more consumption. For right now, china's greatest insurance against the ultra belligerent west is exports. It also needs exports because china still has underdeveloped industries.