China’s slowdown – The daily blog of behavioral and cognitive economics

How China Might Avoid the Middle Income Trap

China recently started its consumer trade-in program. By encouraging households to swap their old cars and home appliances, they hope to boost domestic demand. With cars, financial institutions could lower the down payment. Meanwhile, the appliance incentives will come from local governments. The goal is to expand the household consumption slice of their GDP: At 4.6%, China’s 3rd quarter GDP numbers again displayed a slowdown: Summarizing why China’s economy is growing more slowly, a Cornell University professor cited an “unraveling property sector and unfavourable demographics” as well as sinking growth, deflation, and “loss of confidence in the government’s policies.” ….[READ]