China’s shift toward consumer-driven economy is set to slow – Bloomberg

Early Monday morning in Asia, Bloomberg quotes China’s Government Researcher Xu Hongcai to convey a slower shift investment-led growth to consumption in the coming five years. An aging population and a shrinking workforce are cited as the key reasons behind the conclusion.

Xu Hongcai is Deputy Director of the China Association of Policy Science’s economic policy committee, a think tank under the policy research office of the Communist Party’s Central Committee. His analysis suggests, “The share of consumption in the gross domestic product is likely to rise at a slower pace compared with previous years.”

Additional comments
“Consumption has already passed the phase of rapid increase and will only rise slowly in the future,” Xu said in an interview.

“Economic growth still needs the support of investment.”

“The government will need to guide more funds into investing in infrastructure and facilities that enhance elderly care and promote urbanization,” he said.

“Xu also warned China may face the risk of imported inflation as a stronger global economy pushes up commodity prices.”

FX implications
The news should weigh on the sentiment of the market and is considered negative for Antipodeans. That said, AUD/USD and NZD/USD print mild losses by the press time amid risk-off mood.


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