Is China's economic growth largely dependent on exports, or is it becoming more domestically led? That's a question economists are vigorously debating-and an important one for policy makers and executives alike. An increasingly consumption- and investment-focused Chinese economy could improve the chances of more balanced trading relationships with developed economies. At the same time, businesses operating in China or planning to enter it could find greater opportunities as the economy accelerated its transition from a manufacturing center to a key consumer market.
To shed light on this question, a new way of measuring the role of export growth in China's overall economic expansion has been developed. It finds that exports have been a major driver, but not one as dominant as commonly believed. Indeed, there are clear signs that a shift toward domestically driven economic growth is well under way. The picture that emerges of the Chinese economy has implications for the growth and supply chain strategies of businesses in China and elsewhere.
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