The model of export-led growth is showing limitations but the transition to a more balanced model could be made ??difficult due to the international economic trend (as less resources could be diverted for policies) and political resistance. The shift from savings to consumption may be lower than expected and the market for Chinese consumers less extensive than expected.
In the next year Chinese economy growth could suffer a significant deceleration, due to limitations of the Chinese model of growth and demographic constraints to growth that will begin to unfold in this decade.
2012 could be a critical year due to the coming together of several factors: i) excessive reliance on a “stagnant ” world demand, also changing and rather unstable (see the euro area and the United States); ii) public investment that if from 2008 provide growth rates almost unchanged compared to pre-crisis period, are proving costly and inefficient; iii) a banking system exposed to the local debt from which about 20% of the loans would be non performing; iv) rising income and opportunity differentials along with growing social unrest.
In the long-term looms the aging of the population: it will only take 25 years (in Europe it took from 100 to140 years) for the doubling of proportion of population over-64, moreover it will begin in this decade the contraction of the active population (15-64 years) from which a increased health care costs and welfare for which resources must be found. The speed of the demographic transition will hinder the creation of universal welfare and social security systems: if the Chinese now save for pensions and medical care, likely even more they will save in the future. The shift from savings to consumption may be lower than expected and the Chinese consumers’ market less extensive than expected.