ABSTRACT
As noted in previous chapters, over the past two decades the Chinese economy has grown at an annual rate of around 10%, a pace that stood out in 2012, especially as the global economy continued to suffer from the financial meltdown of 2008–09. However, experts note that there are three major problems that could derail China from its impressive track record of consistent economic throughput: 1) a burst in the property bubble; 2) unbalanced rebalancing; and 3) rising political unrest. 1 Even under temporary duress, China's phenomenal hunger for aluminium, cement, copper and steel have in part caused its gas and oil consumption to surge. In fact, in no short measure, this accelerated usage of resources turned it into the “world's second-largest oil importer after the United States”. 2 In China, for now, this rapid economic growth and massive consumption of energy and resources growth is being driven by export-oriented manufacturing of low-cost goods to the West. The contribution of domestic consumption and services is comparatively lower. For instance, consumption accounts for 42% of China's gross domestic product (GDP), compared to 68% for the USA, 64% for India, 58% for Europe and 55% for Japan. One could say that Beijing has opted to implement a resource-mobilization model of growth instead of a consumption-led approach, but this is changing. Top officials in Beijing are starting to recognize that overreliance on exporting to high-income countries may come with a series of hidden risks. However, change is difficult, especially for a country guided by one-party rule. Gurcharan Das, former Chief Executive Officer (CEO) of Procter & Gamble in India, notes that “Beijing remains highly suspicious of fast-talking capitalists and entrepreneurs. Also, only about ten percent of credit goes to the private sector in China, even though the private sector employs 40 percent of Chinese workforce”. 3
