ABSTRACT
Potential difficulties facing China as it seeks to maintain its phenomenal economic growth is of concern not only to China, but also to the international community. In 2008, Steven Dunaway, of the International Monetary Fund, offered his observations on China's economic future. Income on a per capita basis is still very low in China relative to other major countries, the benefits of economic development have been unevenly distributed across the country and across sectors of the economy, and an estimated 150-200 million workers are still underemployed. The key concern is that the imbalances in the economy could in time slow growth, perhaps significantly, putting China's economic miracle at substantial risk, unless the country shifts policies to foster reliance on domestic consumption. Policy measures used thus far have been ineffective in breaking this vicious cycle and re-establishing macroeconomic control. Combination of distortions in key prices and other policies and the structure of the economy have served to favour investment over consumption.
