It is extremely difficult for countries with historically low consumption shares to increase consumption because raising the consumption share requires transferring income from businesses to households, but those businesses are globally competitive largely because of subsidies and transfers that favored them; reversing those subsidies causes businesses to collapse and GDP to contract sharply, as happened in the US in the 1930s and Japan in the 1980s-2010s.
causalpending
Speaker
Michael PettisEvidence Quote
“if those businesses are competitive globally mainly because of all of these subsidies...when you reverse them, they stop being competitive and you could end up seeing...a collapse in GDP”
Source
Michael Pettis: China’s Consumption Crisis Is The World’s Crisis— The Monetary Matters NetworkCreated: 8/11/2026, 7:43:21 AM
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