Sovereign wealth meets poverty in China

Recently, The Economist pointed out that Chinese consumer spending has fallen from 47% of GDP in the early 1990s to 36% in 2006. Whereas conventional wisdom attributes weak spending in Asian economies to a greater propensity to save, World Bank research finds that private Chinese savings rates have actually fallen (Kuijs 2006). Lower spending stems instead from slow growth in household income, mostly due to a sharp fall in relative wages. According to Jahangir Aziz and Li Cui (2007) at the Inter