## China's Rebalancing Explained in 6 Charts

_IMF Blog, September 6, 2016_

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**Canonical URL:** [China's Rebalancing Explained in 6 Charts](https://www.imf.org/en/blogs/articles/2016/09/06/chinas-rebalancing-explained-in-6-charts)

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- [Markdown version](/en/blogs/articles/2016/09/06/chinas-rebalancing-explained-in-6-charts/index.md)
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## Bibliographic details
- Authors: Longmei Zhang
- Published: September 6, 2016

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### The Scorecard: mixed progress
- Rebalancing denotes a structural transformation across four inter-related dimensions: external, internal, environmental, and distributional.
- Overall progress since the global financial crisis has been mixed:
  - Strong on external rebalancing (switching from external demand to domestic demand).
  - Uneven on internal, environmental, and distributional dimensions.
- Key statistic: the current account surplus fell from the pre-crisis peak of 10 percent of GDP to around 3 percent in recent years.
- Exports are no longer driving growth.

### Consumers growing in importance
- Until 2011, reduction in the external imbalance coincided with a growing internal imbalance as the investment to GDP ratio rose due to strong fiscal stimulus.
- Since 2012, internal rebalancing from investment to consumption has made headway.
- Notable acceleration in 2015: consumption is now contributing more than two thirds of GDP growth.

### Deindustrialization: speedy transition
- China has made substantial progress switching from industry to services.
- The speed of the transition is in line with international experience.

### Credit: China’s Achilles’ heel
- Progress has lagged on reducing reliance on credit.
- Credit intensity (the amount of new lending provided for each additional unit of output) has more than doubled since the global financial crisis.
- Risk highlighted: absent decisive corporate restructuring and reform of state-owned enterprises, credit to the nonfinancial private sector will likely rise continuously, increasing the risk of disruptive adjustment.

### Pollution and inequality: on the high side
- Energy intensity of output has fallen, but air pollution remained very high in cities.
- Income inequality remains very high.
- Labor’s share of GDP is rising.

### Falling savings and implications
- With population ageing and envisaged strengthening of social safety nets, household savings are expected to fall gradually and consumption to rise.
- Expected outcome: investment can moderate while keeping the current account balance broadly stable.
- The services sector is likely to increase in importance, helping reduce environmental pressure and increase labor’s share in national income.

*Source: China’s Rebalancing Explained in 6 Charts — Longmei Zhang, September 6, 2016.*

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## Content in this bundle

- **用六张图解释中国的再平衡; iMFdirect博客; 2016年9月6日**
  - [用六张图解释中国的再平衡; iMFdirect博客; 2016年9月6日 (Markdown version)](/external/chinese/np/blog/2016/090616c.pdf.md){rel="alternate" type="text/markdown"}
  - [用六张图解释中国的再平衡; iMFdirect博客; 2016年9月6日 (PDF)](/external/chinese/np/blog/2016/090616c.pdf){rel="external" type="application/pdf"}

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## References

- [paper](https://www.imf.org/external/pubs/cat/longres.aspx?sk=44225.0)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-scorecard.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-scorecard.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart1.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart1.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart2.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart2.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart3.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart3.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart4.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart4.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart5.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart5.jpg)
- [https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart6.jpg](https://www.imf.org/wp-content/uploads/2016/09/china-rebalancing-chart6.jpg)

_Source: https://www.imf.org/en/blogs/articles/2016/09/06/chinas-rebalancing-explained-in-6-charts_