Part 3/6:

China's solution has been to shift investment from the property sector into manufacturing. This has led to a growing trade surplus, as China's share of global manufacturing is increasing relative to its share of global GDP and consumption. The rest of the world must accommodate this shift, but in a hostile global environment, this is unlikely to happen.

The Difficulty of Boosting Consumption

Increasing the consumption share of GDP is incredibly difficult for China. This requires increasing the household income share, which involves a redistribution of resources from businesses, local governments, or the central government. This creates conflicts within China, as different sectors resist losing their share.